Fast’s demise will teach us how vulnerable newly built unicorns really are – Marketingwithanoy

the first quarter of 2022 was a great period for startups to raise venture capital compared to any time other than the frenzied private capital cycle of 2021. While there was still plenty of capital in the market and deal closing seemed strong early this year, we are seeing stress cracks appearing in the startup sector.

What gives?

It seems that many startups raised more than the cap of defensible prizes last year, leaving them in a zero-margin situation. Any startup that racked up two- or three-figure revenue in 2021 is now facing an environment of declining values ​​for tech companies and high-profile investor groups pulling out of deals. This can lead to down-rounds (or worse).

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What makes the situation ironic is that we are starting to see the start-up layoffs, implosions, and valuation downturns that occur when venture capital is frozen. New data from PitchBook reviewed by The Exchange this morning paints a picture of a still warm US VC market. And yesterday, when we explored the global venture market with data from Crunchbase News, we saw a similar picture. (More information coming tomorrow, so expect more details on sectors and regions during the week.)

Just things are not that bad in the startup market, at least according to the investment totals we counted in the first quarter. And yet you can’t start Twitter without getting into the doom and gloom of startup for the past few weeks. So what’s happening?

unicorn vulnerability

Early PitchBook show data that there were likely 4,822 venture capital rounds in the United States in the first quarter. Those deals were worth .7 billion, the data company said. lf the Q1 pace is maintained for the rest of the calendar year, that equates to 19,288 deals and 2.8 billion.

Compared to 2021 totals from the same source, US VC activity in 2022 is on track to surpass last year’s deal volume (17,105) while lagging behind dollar volume ($342.2 billion). That’s honestly hardly a slump, even though all startups would like to see more capital paid out each year than the last.

The irony of the current situation is that if 2021 had been less lavish, fewer startups would face valuation and cash problems this year.

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