Nearly a year ago, venture capital firms were cautioning founders of the coming lean times in the private markets, as high-flying valuations and a long run of a zero-interest-rate environment came crashing down. Now, top VC firm Lux Capital is warning their investors, or limited partners (LPs), of a new phase in the markets: What they're calling "crushing consolidation" in the VC space.
Despite the current gloom, the Lux Capital team sees “a very promising future being formed out of the strife in the markets,” as the firm, known for its bets on science and tech-heavy sectors like biochemistry and A.I., wrote in their recent Q4 2022 LP letter. And Peter Hébert, cofounder and managing partner at Lux Capital, is upbeat: "Despite the pain that's out there, and the turmoil, these are the conditions that ultimately lead to excellent companies,” he told Fortune. He believes "this is absolutely the time you want to be an investor."
