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Venture Monitor

Q1 US venture capital trends in five charts

The first quarter of 2022 showed signs of a slowdown for US venture dealmaking and exits compared to the record highs of 2021.

The first quarter of 2022 showed signs of a slowdown for US venture dealmaking and exits compared to last year’s record highs.

While the public market volatility of the past few months is expected to have a trickle-down effect on other venture metrics in coming quarters, the start of 2022 also suggests the onset of a healthy recalibration period for both startups and venture investors.

Here’s a closer look at five key trends from our Q1 2022 PitchBook-NVCA Venture Monitor that depict the state of the venture market after the frenzied activity of 2021.

 

US VC-backed companies raised $70.7 billion across an estimated total of 4,822 deals in Q1, marking the highest number of closed transactions in any quarter on record.

Even though Q1 deal value was lower than every quarter in 2021, the number still exceeded pre-2021 quarterly totals dating back to 2010. PitchBook analysts say that VC deal activity will likely see a delayed reaction to the public market slowdown—a trend to watch closely in the next quarter.

 


2021 was a record year for first financings, almost 33% higher than any previous year. With more than 1,000 deals closed, Q1 kept momentum from the past year and finished with more companies raising their first institutional capital than any quarter prior to 2021.

However, first-financing capital could become more difficult to raise in future months if market volatility persists.

 

Owing to a slew of headwinds from interest rates, inflation and geopolitical uncertainty, Q1 wrapped up with just 28 public listings and total VC exit value in the US showed a stark decline after three consecutive quarters each totaling over $192 billion.

“IPOs are definitely the first place that you’re going to see any market changes, especially in the data,” said Kyle Stanford, a senior analyst at PitchBook. The slowdown can be seen as a period of waiting for both investors and startups looking to go public, as both parties watch for clarity in a choppy public market, he added.

 

Many of the commitments to the funds that closed in Q1 were likely agreed upon during the boom times of 2021. Even though a large portion of that total is spread across just a few funds, the added dry powder should help further insulate the market from immediate, major disruption.

 


New York and San Francisco maintained their perennial status as the most active regions, representing a combined total of 54% of capital invested in the first three months of 2022.

Featured image by Sean Gladwell/Getty Images

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