The global venture capital market slowed in the first quarter – but not as much as expected – TechCrunch
I can’t stop, I won’t stop.
That’s what early data seems to say about the global venture capital market in the first quarter of 2022. New data published by Crunchbase News1 this morning paints a picture of a slowing market, but barely stopped.
In comparative terms, the dataset shows that the global venture capital market in Q1 2022 was actually bigger in dollar terms than a year ago. However, compared to the fourth quarter of 2021, it marked a decline – the first of some quarters of record venture capital totals.
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The Exchange, and TechCrunch+ more generally, will explore the global venture capital market from several angles in the coming days. Data from the usual suspects – Crunchbase, PitchBook, CB Insights, venture capital associations and startup-serving banks – will fill in the current partial picture of the state of the world.
A drop in venture capital investments in the first quarter is not a surprise, even if the drop is modest and exists only on a quarterly basis. A decline in the value of tech stocks from the final months of 2021 has helped cloud the mood of private and public investors about the value of tech companies. What was once the hottest industry in the world has cooled somewhat, leading to an anticipated decline in venture capital activity.
The stakes are high, mind. If the venture capital market slows further in the second quarter, the number of startups that may find themselves looking for capital in a market that does not match their past valuations could skyrocket. And if that happens, the exuberance of 2021 could become the hangover of 2022.
Let’s explore data regarding early and late stage activity and what remains of the exit market. Next, we’ll explore how the data matches — or doesn’t — match our expectations from interviews and Q1 news events.
Our old enemy – the lag in venture capital data – could be at stake in the results. So we’ll be asking ourselves at the end of our work today whether we expect the second quarter to be even more conservative than the picture we’re beginning to paint for venture capital activity in the first quarter.
Where business slows down fastest
Normally, we would pay more attention to year-over-year results than to consecutive quarters when comparing venture capital results. But following the venture capital party of 2021, it’s actually more reasonable to compare the periods in time order. Why? Because things have changed so much in the past year for the venture capital and startup worlds that comparing to the prior year’s results is a bit more apples:oranges than looking at back-to-back quarters.
But we will always do both, for the sake of completeness. Per Crunchbase News, this is what the data looks like: