US Deal Default Rates by Stage 2005 -2023
In the wake of the 2008 Global Financial Crisis (GFC), venture capital defaults surged to a peak in 2009 (1), marking a turbulent era for investors. However, post-crisis, a semblance of stability emerged as defaults converged (2), offering a glimpse of recovery.
By 2009, default rates for VC and Growth deals normalized to 45% and 20% respectively, signaling a return to equilibrium amidst ongoing efforts to mitigate risks. A steady decline in defaults ensued, guiding the industry towards resilience.
Yet, the onset of the COVID-19 pandemic in 2020 unleashed a fresh wave of uncertainty, pushing defaults back to crisis levels (3).
As financial professionals navigate these stormy waters, the tale of VC defaults underscores the cyclical nature of the market and the imperative of adaptive strategies in times of crisis.
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