(Based on data through April 30th, 2025)
The PitchBook VC Dealmaking Indicator leverages deal-level data to quantify how startup-friendly, or investor-friendly the capital raising environment is. The Indicator incorporates PitchBook’s market liquidity measures, cap table information, and momentum metrics to compose an indicator which observes early-stage, late-stage, and the venture growth deal dynamics. A higher indicator score reflects a more investor-friendly dealmaking environment, while a lower score points to a more startup-friendly one. (For in-depth methodology, click here)
The VC environment ebbs and flows between startup and investor friendliness. Post-2020 the indicator saw greater shifts as the high liquidity environment 2021 drove the indicator to historical low as the near-zero interest rates and an influx of non-traditional investors led to a highly startup-friendly landscape. This trend sharply reversed starting in 2022, largely driven by the expected demand for capital from startups seeking additional funding after having raised large rounds over the prior two years. The investor-friendly environment has peaked in early 2024 and since shown signs of slow recovery back into neutral territory.
The chart below shows time-series data for each feature that comprises the overall indicator score, which provides insight into what is driving the model’s output.
Features
Capital demand-supply ratio: The balance between capital deployed by VC firms and other market participants (capital supply) and the demand from startups seeking funding (capital demand).
Startup funding rate: The estimated number of startups seeking funding relative to the volume of available deals.
Cumulative dividends: A mandatory payout to investors that accrues over the life of the startup and is realized at a liquidity event.
Liquidation participation: Determines whether preferred shares receive additional compensation after their liquidation preference is paid out.
Percent acquired: Tracks the proportion of ownership that investors acquire in funding rounds.
Years between VC rounds: Median years between deals collected in the quarter and their previous VC round.
Valuation change: The median change from the previous round’s post-money valuation to the current round’s pre-money valuation.
Please reach out to [email protected] for additional information or feedback.
The PitchBook VC Dealmaking Indicator is a proprietary methodology developed by PitchBook for its own sole use, unless permission has been otherwise granted.
Featured image by Drew Sanders/PitchBook News
Learn more about our editorial standards.
