Global Venture Funding Fell Last Quarter For The First Time In A Year

Link to the original article: Global Venture Funding Fell Last Quarter For The First Time In A Year. How Significant Is That?

Global venture funding reached $160 billion in the first quarter of 2022, Crunchbase data shows, marking the first time in a year of records when startup capital fell quarter over quarter.

The first quarter of 2022 jumped 7 percent compared to the first quarter of 2021, but fell 13 percent, from $184 billion, in the fourth quarter of 2021, which notched the largest funding amount raised in any quarter last year, and for all time.

In 2021, as the stock market continued its climb and as many venture-backed technology companies took the opportunity to debut, there was a significant increase in dollars invested in private companies. In fact, venture funding almost doubled to $669 billion in 2021 from $335 billion in 2020.

While the most recent quarter’s global venture funding totals slowed compared to the end of 2021, it’s too soon to call it a puncturing of the bubble: The first-quarter tally still topped every quarter in 2020.

Seed grows

Seed funding was the sole funding stage that grew over prior quarters in Q1. Seed funding was at $10.3 billion for the first quarter of 2022; close to flat quarter over quarter by percent and up year over year by 45 percent.

Early stage

Early-stage funding clocked in at $51.9 billion, its third-highest quarter in the last 12 months. It was down quarter over quarter by 18 percent but up year over year by 21 percent.

Late-stage trends down

Late-stage funding and technology-growth funding was $97.9 billion in Q1, down 12 percent quarter over quarter and flat year over year.

Unicorns slow

Newly minted unicorns—companies first valued at $1 billion or more—on The Crunchbase Unicorn Board totaled 129 companies in the first quarter of 2022. This was also down, from 146 newly minted unicorns in the fourth quarter of 2021 and the 132 crowned in the first quarter of 2021.

Earlier in 2022, the value of The Crunchbase Unicorn Board reached $4 trillion in value for the first time. It’s now valued at $4.3 trillion with 1,260 companies listed.

SPACs reign

Public debuts for venture-backed startups fell year over year. At least 22 venture-backed companies went public above $1 billion in the first quarter of 2022, compared with 46 in the first quarter of 2021.

Of those venture-backed billion-dollar public offerings in the first quarter of 2021, 16 were SPACs, an indication that many companies planning a traditional IPO are waiting for the markets to pick up again.

Slowdown?

The venture funding market in Q1 2022 was not as strong as the three prior quarters, but held up over the first quarter of 2021. This trend does not indicate a decline to pre-2021 dollar amounts invested.

Venture firms across the ecosystem have raised ever-larger funds with smaller intervals between funds, while private equity doubled down on investing in private companies leading many of the largest fundings in 2021.

Leading venture firms are not showing a slowdown in investment pace for the first quarter, with some picking up their pace this past quarter compared to the fourth quarter of 2021. (We’ll have more on this in our report later this week on most active investors in Q1).

Still, the turbulence in the public markets is likely to have a dampening effect on late-stage financings and valuations. We’ve already seen unicorn Instacart slash its own valuation significantly, from $39 billion to $24 billion. And while the first quarter did anoint seven new decacorns—startups valued at $10 billion or more—that’s down from 37 in 2021.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of April 4, 2022.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman

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