Tumbling Startup Activity Is Screaming A Warning For Tech Stocks

Tumbling Startup Activity Is Screaming A Warning For Tech Stocks
Andrew Rummer

almost 3 years ago1 min

After rising in tandem over the past decade, a measure of activity in private tech markets has suddenly broken from its historical relationship with publicly traded tech stocks – suggesting pain may be in store for investors. 

Bloomberg’s US Startups Barometer (shown in blue on the chart above) has plummeted since the start of 2021, driven by a decline in startup financing. Measures of deals – the number of times startups raised money – and first financings – the number of startups raising money for the first time – have declined 13% and 20% respectively over the past year, according to the data provider. 

The dramatic drop suggests tough times ahead for the Nasdaq Composite Index, a benchmark for US-listed tech stocks that’s climbed 76% over the past year (shown in pink on the chart). Be warned!

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