Can’t stop, won’t stop.
That’s what early data appears to say about the global venture capital market in Q1 2022. New data released by Crunchbase News1 this morning paints the picture of a market slowing, but hardly stopped.
In comparative terms, the dataset shows that the global venture market in Q1 2022 was in fact larger in dollar terms than its year-ago comp. However, compared to the fourth quarter of 2021, it marked a decline – the first in some quarters of record-setting venture totals.
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The Exchange, and TC+ more generally, will explore the global VC market from a number of perspectives in the coming days. Data from the usual suspects – Crunchbase, PitchBook, CB Insights, venture associations, and startup-servicing banks – will fill in today’s partial image of the state of the world.
A fall in venture capital investment in the first quarter is not a surprise, even if the decline is modest and only in existence on a quarter-on-quarter basis. A decline in the value of technology stocks starting in the final months of 2021 helped sour the mood among investors private and public about the value of technology companies. What was once the hottest sector in the world cooled somewhat – leading to an anticipated retrenchment in venture activity.
The stakes are high, mind. If the venture market slows more in Q2, the number of startups that could find themselves hunting for capital in a market that doesn’t agree with their past valuations could skyrocket. And if that happens, the exuberance of 2021 could become the hangover of 2022.
Let’s explore data concerning early-stage and late-stage activity and what’s left of the exit market. Then we’ll explore how the data does – or doesn’t – match our expectations from interviews and news events from the first quarter.
Our old enemy — the lag in venture capital data — could be at play in the results. So we will ask ourselves at the end of our work today whether we expect the second quarter to be even more conservative than the picture we’re starting to sketch of Q1 VC activity.
Where venture is slowing the fastest
Normally we’d pay more attention to year-over-year results than those set in sequential quarters when we compare venture capital results. But in the wake of 2021’s venture capital party, it’s actually more reasonable to compare periods in temporal order. Why? Because things changed so much last year for the venture capital and startup worlds that comparing against year-ago results is a bit more apples:oranges than looking at successive quarters.
But we’ll still do both, for the sake of completeness. Per Crunchbase News, here’s how the data looks: