The cofounder of a $4 billion VC firm says the bear market has Silicon Valley somewhere in the 5 stages of grief. ‘We’re probably somewhere between anger and bargaining’

The venture capital market is slowing, and some VCs are having trouble accepting the news.

At least that’s what Josh Wolfe, the co-founder of the $4 billion VC firm Lux Capital, had to say in an interview with The Financial Times this week.

Wolfe, who holds a Ph.D. in computational biology from Cornell University, argued his peers are resisting coming to grips with the ongoing downturn in the start-up economy, likening their response to being stuck in between two of the five stages of grief that pioneering Swiss-American psychiatrist Elisabeth Kübler-Ross developed in the 1960s: denial, anger, bargaining, depression, and acceptance.

“We’re probably somewhere between anger and bargaining,” he said.

Venture capitalists invested around $16 billion in early-stage deals with U.S. companies in the second quarter, according to data from PitchBook. That’s a 22% decrease from the same period a year ago, and it represents the biggest quarterly decline in VC funding since 2010 if you don’t include the pandemic-induced disruption seen in the second quarter of 2020.

Venture-backed exit value in the U.S. was also down roughly 6% from a year ago in the first half of 2022 to just $48.8 billion, according to PitchBook data. VCs typically earn their profits when the companies they have invested in are acquired or go public—often called the exit—and with global initial public offering (IPO) volumes sinking 46% in the first half of this year compared to 2021, some VCs are finding “exits” more challenging than they have been in recent years.

As PitchBook noted in a July report, “the IPO window was virtually shut” in the second quarter, with VC-backed public listings hitting a 13-year low.

This is important because venture capital has become something like the Wall Street of the west in the modern era, funding startups that go on to become giants as in the famous examples of Apple, Google, and Facebook.

Not the only VC warning

Monday wasn’t the first time Lux Capital has warned about the ongoing slowdown in the VC space either.

Story continues

Deena Shakir, a partner at the firm, told Yahoo Finance in July that there’s a new normal in early-stage investing these days.

“What we saw across stages in the last couple of years was this incredibly fast pace [of growth],” she said. “You’d see a pitch and the founder would have 10 term sheets within 24 hours without the type of diligence that you would want to do. That’s not really happening anymore. There is a slowdown that’s happening… in terms of the pace of doing rounds and in terms of the capital deployment.”

The slowdown in early-stage investing was also foreseen by some of the industry’s more experienced investors. Bill Gurley, a renowned venture capitalist who currently serves as a general partner at the investment firm Benchmark, predicted early-stage investing would slow sharply back in April, and argued VCs would be unwilling to accept their changing reality.

“An entire generation of entrepreneurs & tech investors built their entire perspectives on valuation during the second half of a 13-year amazing bull market run. The ‘unlearning’ process could be painful, surprising, & unsettling to many. I anticipate denial,” he said in a tweet.

Sheel Mohnot, an investor at the VC firm Better Tomorrow Ventures, also told The New York Times in July that his firm has reduced the valuations for a record number of its startup investments this year due to the changing market environment. “People don’t realize the scale of change that’s happened,” he said.

And Jeff Morris Jr., a managing partner at the crypto-focused VC firm Chapter One, told The Wall Street Journal last month that this is the “toughest” funding environment he has seen in his career. “It will be painful in the short term.”

This story was originally featured on Fortune.com