the venture capital market is retreating somewhat from its aggressive pace for 2021, new data shows.
According to data collected by Carta, a unicorn startup that provides stock management and other services to private companies, the round sizes of the Series A to C phases are declining in the United States, while valuations for those deals are also falling. For investors looking for a deal, the price delay may be welcome. For founders chasing their next tranche of capital, the news could be less desirable.
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We’re just weeks away from the close of Q1 2022, which means we’ll be getting a deluge of data on domestic and global venture capital market performance in the near term at the start of the year. But while aggregated data is useful for mapping bigger and slower-moving trends in the startup market, we care more about short-term changes this morning.
This is for investors who are putting capital to work now and for startup founders looking to close another round in the near future.
Today we are only talking about the US market, where Carta has the most data and thus the strongest prospect. However, we will continue to look for this kind of data from the company and its colleagues throughout the year. Now, into the data.
How Serie A, B, and C Rounds Are Changing in the United States
Let’s start with the capital raised per round.
The data here requires little nuance. Via Carta’s Head of Insights Peter Walker, here you go:
Note that we are comparing the last two months of 2021 to the first two months of 2022, not full quarters. Walker also confirmed to Marketingwithanoy in an interview that the above data is based on cut-off dates, not announcement dates, so we’re not mixing rounds from different time periods that would contaminate the data set.
From November and December 2021 to January and February 2022, Serie A rounds recorded the largest average decrease in round size in the United States. This indicates that outlier Series A rounds – in terms of size – are becoming less frequent. That the median Series A round also fell is likely due to similar reasons, even if it belies a less extreme drop than what the average results show. Still, Series A rounds will remain above $10 million on both a median and average basis in the early months of 2022. Delay or not, the market is still hot.
Series B lap data is similar, with a sharper mean decline than the median lap size shift. An even smaller median drop than we saw in Series A rounds means the Series B market is changing, but not as much for most companies raising. Series C data is more extreme, with round sizes falling more sharply than average in median terms, implying that outlier rounds change in the enterprise phase, but we see more movement between smaller deals than in Series A and B rounds.
As far as valuations are concerned, the data here is comparable, with one specific caveat. From the same source: