John Thornhill, the founder of Sifted, argues that the boom is over but Silicon Valley’s optimism is masking problems with investor capital and returns.

In these grim times, the world could do with a shot of hope. Right on cue, up pops the irrepressible venture capitalist Marc Andreessen to shout about his latest techno-optimist manifesto. “Give us a real world problem, and we can invent technology that will solve it,” the co-founder of Andreessen Horowitz wrote this week.

No matter the billions of dollars wasted on fruitless crypto and metaverse investments, nor the recent landslide in private market valuations, nor the still-chilly state of the public listings markets; the techno-capitalist machine that is Silicon Valley continues to hum with the conviction that it can build a better future. To the outside observer, it appears like “ideology as usual” in VC land.

Yet when the volume is turned down, many VCs have been quietly rethinking their financial game, recognising that the uniquely favourable conditions that benefited their industry over the past two decades are never going to occur again. Last year, some commentators even speculated about whether the industry had reached a “Minsky moment”, when asset values suddenly collapsed after a period of reckless speculation. (There has been nothing quite that dramatic so far.)

This year, others have questioned whether we might be nearing the end of the VC-driven entrepreneurial age. For an industry built on short-sighted enthusiasm and wild-eyed ambition, there is a lot of doubt around as many VC funds struggle to raise capital. The storytellers need a new story.

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