2022 Venture Funding Levels Down 35% From 2021 Numbers
Massive declines, but marks were still the 2nd highest of the past decade
The numbers are in for 2022 venture funding activities and, to little surprise, there was a bit of a drop-off from the record amounts distributed in the previous year. Approximately $450 billion were taken in by various entities across the globe in 2022 while the overall figure garnered in 2021 tallied about $680 billion. This is certainly a rather precipitous drop by any scale. Indeed, it eclipses those viewed after the 2008 crisis and the previous collapse almost 10 years prior. Total US/Canada numbers for the year reached the $240 billion mark while the final quarter of the annum came in at about $36 billion that was distributed to around 1300 companies. This was down from almost $50 billion in Q3 and well short of the marks established the previous year that were 60+% north of that figure.
Late-stage grants were sharp as IPO’s slowed down and valuations proved to be less than desirable for companies engaged at this level. Early and seed state funding also saw hefty declines but not as pronounced as those in the former group on a percentage basis. The enormous Adobe/Figma acquisition expectedly proved to be the major transaction for the period, and there were several other mergers that turned out to be rather significant.
The circumstances that led to these historic highs and lows of the past couple of years are highly unique and may very well be viewed from the perspective that the market was fully expected to follow this type of deviation given the pent-up response to pandemic driven forces. Exceptional levels of investment were followed by what is simply an expected correction the subsequent year. Indeed, although the decline was marked, the amount raised during this period was still exceptional by past standards.
On the other hand, perhaps we are indeed due for another significant correction. A good portion of the successes seen were sprinkled primarily throughout the 1st two quarters of the year, and a number of venture capital funding groups have put out the word that things will be curtailed on expenses and general outlays. In short, there is a great deal of uncertainty at the current time combined with record levels of cash on hand that eventually has to be put into play.
