The Venture Downturn Isn’t Coming – It’s Already Here

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The pace with which venture capitalists are placing funding around the world in April slowed down again.

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Venture capital in dollars, as tracked by Crunchbase News in new reportpeaked in November 2021. From this peak, the value of venture capital investment declined for most months before dropping another $5 billion from March to April.


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That the venture capital industry is retreating should come as no surprise. TechCrunch covered the fall in the cost of a startup for example, at most stages earlier this week. Many companies that saw a pandemic boom, now they are experiencing return to Earth, further hurting investor demand for previously popular categories, and some recent IPOs in tech sectors that have a fair amount of startup activity suffer from sharp sell-offs.

Subscribe to TechCrunch+However, this data is important not only because it confirms our expectations for the direction of venture capital activity in 2022 – it also indicates that the changes in the venture capital market will be somewhat gradual, which helps to explain why the venture capital data for the first the 2022 quarter turned out to be stronger than some expected. Since the slowdown in venture capital investment will not be a single thunderclap, we expected more damage to be done in the second quarter than in the first, and the Crunchbase News data set highlights this prospect.

This morning we analyze the latest data to improve market sentiment for the current venture capital market. Which, as you will soon see, is much smaller than it was just a few months ago.

Mixed but significant failure

Despite the 12-month low, we are not seeing a sharp drop. According to Crunchbase, the amount of investment in private companies last month is only 10% lower than in March this year. The year-on-year decline is also not significant: the figure for April 2022 is only 13% less than for April 2021.

The decline also has nuances when considering different stages of investment. Seed funding actually increased by 14% year on year. But late-stage funding was down 19% year-on-year. Even though it hasn’t changed from the previous month, we think the last value is the most important.


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