VC investment in the US shrinks by 40.8% in 2022

A total of 10,428 venture capital (VC) funding deals were announced in the US in 2022, with a disclosed funding value of $193.9 billion, according to the deals database by GlobalData. The leading data and analytics company reveals that this represents a massive 40.8% decline in the value of VC funding compared to 2021. Deals volume also fell by 24.9%.

The deal count in 2022 for the full year was 15,852, down 14% from 18,521 in 2021. And deal value was $238.3 billion, down 30% from $344.7 billion a year earlier, according to a report by Pitchbook and the National Venture Capital Association (NVCA).

On an annual basis, angel- and seed-stage deal activity remained relatively resilient in 2022, with $21.0 billion invested across an estimated 7,261 deals. However, the four consecutive quarters of declining deal counts could foreshadow a continued slide in 2023. Seed-stage deal sizes and pre-money valuations demonstrated notable growth over the 2021 figures due in part to a large number of actively investing micro-funds as well as the participation of non traditional and crossover investors. As per Venturebeat.

Expert says, there was a significant slowdown in global deal activity, with factors such as the Russia-Ukraine conflict, inflationary pressures, macroeconomic challenges, and recession fears denting deal-making sentiments across several key markets globally and the US is not immune to these headwinds.

However, despite the decline, the US continues to be the top market worldwide, accounting for 47.6% of global VC funding value and 37.8% of volume in 2022. Analysis of GlobalData’s Financial Deals Database reveals that VC funding value in other key global markets such as China, the UK, and India fell by a respective 46.4%, 24.3% and 38.2% in 2022 compared to 2021.

With the going wave, investors have become cautious, and there have been massive falls in average US VC funding sizes—from $23.6 million in 2021 to $18.6 million in 2022. There was also a significant decline in the number of big-ticket deals. For instance, the number of VC deals announced in the US valuing more than or equal to $100 million stood at 449 in 2022, as compared to 839 such deals in 2021.

Going forward Retail investors can rest assured. Online startup investing has been growing quickly, and it is still a thriving market. Even if total investments are down in 2022, it won’t be too far off from last year’s total.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA