In April, the rate at which venture capitalists deployed funds throughout the world slowed yet further. According to Crunchbase News’ latest report, venture capital dollar volume peaked in November 2021. Since then, the value of venture investments has steadily declined in most months before plummeting another $5 billion between March and April.
It should come as no surprise that the venture capital business is slowing down. For example, just this week, reported on plummeting startup values at all stages. Many firms that saw a pandemic boom are now seeing a downturn, hurting investor demand for formerly hot categories, and the other recent IPOs in tech areas with much of startup activity are seeing strong selloffs.
The data is significant not only because it verifies our predictions for where venture activity will go in 2022, but it also suggests that the shift in the venture capital market will be gradual to some extent, which may explain why VC data in Q1 2022 was higher than expected. We anticipated to see more damage in Q2 than we did in Q1 since the slowdown in VC investments won’t be a single thunderclap, and the Crunchbase News dataset confirms this. We’re examining the newest figures this morning to get a better sense of market mood in the current venture capital market. As you’ll see in a moment, it’s a lot smaller than it was a few months ago.
A skewed but significant drop, despite the 12-month low, there hasn’t been a significant drop. The amount invested in private startups last month was just 10% lower than in March of this year, according to Crunchbase. The year-over-year drop isn’t huge, though, with April 2022’s total being only 13% lower than April 2021’s. When looking at the different investment phases, the drop is likewise complicated. In fact, seed funding climbed by 14% year over year. Late-stage financing, on the other hand, is down 19 percent year over year. Despite the fact that it was unchanged month over month, we believe the latter statistic is the most important.