VC Deal Decline in 2022: Tough Times Ahead?

Capital is becoming harder to come by

Startups seeking venture capital are being hindered by market headwinds, according to a new PitchBook report. This research examined VC trends in Q4 2022 for investments made at seed, late-stage and nearing-exit levels.

Good news: Capital raised in 2022 reached a record high of $162.6 billion across 769 funds, with angel and seed-stage deals also remaining resilient at $21.0 billion invested through an estimated 7,261 deals.

The year had its ups and downs. Q4 2022 saw a fourth straight quarter of decreasing deal counts, with total exit activity for the year at $71.4 billion — the first time it fell below $100 billion since 2016. Acquisition volume also dropped substantially; Q4’s total acquisition deal value was only $763 million, which is lower than in any quarter over the past decade.

Q4 saw just 14 public listings by VC-backed companies, revealing how rising interest rates and macroeconomic volatility have significantly diminished institutional investor enthusiasm.

PitchBook attributes the VC market’s instability to various factors, such as nontraditional investors pulling back their capital due to less favorable risk/return profiles. The 2022 report also reveals a sharp decrease in upside potential for VC-backed startups that discouraged further investment in the space.

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Dylan Williams

Dylan Williams is a multimedia storyteller with a background in video production and graphic design. He has a knack for finding and sharing unique and visually striking stories from around the world.

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