For some second-tier assets, we foresee continued valuation pressure leading to continued down or flat rounds along with more recaps unless there is a significant positive change in the exit markets.
But more generally, funding is getting harder for a number of startups, with valuations under pressure for many.
"Balance sheet cleansing and de-levering will only continue to keep asset valuations under pressure and the probability of continued write-downs high, in our view".
But with investor appetite cooling a little on overheated valuations, the pressure is on for highly capitalised businesses to tighten up their operations for the next phase of growth.
Bottom line, there are definite console transition risks in the sector for the next few quarters, which could pressure valuations, but looking longer term there still appears be good upside for the top-tier players like Activision and EA.
The I.P.O. last week will exacerbate this tension: Facebook's huge valuation now puts pressure on the company's strategists to increase its revenue-per-user.
He noted investors continue to anticipate an eventual re-valuation, but "the pressure is not like it was last fall" when the fixed exchange rate came under heavy speculative attack in November.
That dominance has pressured valuations.
Spotify, which raised venture funding at an $8.5 billion valuation, has some pressure to exceed or at least meet this with its public market cap.
"We are seeing fundraising challenges everywhere, even in our very best portfolio companies," wrote Wilson, most likely referring to his portfolio company Foursquare, which would like to raise at a $700 million valuation despite VC pressure to raise at a more rational $200 million to $300 million.
