Market Downturn Rattles Venture Investors Despite Funding Surge

Sustained declines in the prices of technology stocks and cryptocurrencies are stirring panic among many venture capitalists, after a year of record fundraising and investment.

Prominent investors have sounded alarms in recent weeks about a wide disconnect between private and public market valuations. Among the doomsayers are partners at the world’s most powerful tech investment firms, including Founders Fund, Sequoia Capital and SoftBank Group Corp.

Technology companies that flourished during the pandemic, including DoorDash Inc., Etsy Inc. and Zoom Video Communications Inc., have dropped more than 30% since November. For venture capitalists, that’s forcing a reassessment of ...