Can’t stop, won’t stop.
That’s what early data seems to be saying about the global venture capital market in the first quarter of 2022. New data released by Crunchbase News1 this morning paints the picture of a market slowing down, but barely stopping.
In comparative terms, the dataset shows that the global venture market in the first quarter of 2022 was, in fact, larger in dollar terms than its year-ago comp. Compared to the fourth quarter of 2021, however, there was a decline – the first in some quarters of record totals for businesses.
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The Exchange, and Marketingwithanoy+ more broadly, will explore the global VC market from a number of perspectives in the coming days. Data from the usual suspects — Crunchbase, PitchBook, CB Insights, corporate associations and startup service banks — will fill in the current partial picture of the state of the world.
A decline in venture capital investment in the first quarter is not a surprise, even if the decline is modest and only on a quarterly basis. A decline in the value of technology stocks from the closing months of 2021 worsened sentiment among private and public investors about the value of technology companies. What was once the hottest sector in the world cooled somewhat, leading to an expected cutback in corporate activities.
The stakes are high, mind. If the venture market slows more in the second quarter, the number of startups seeking capital in a market that disagrees with their past valuations could skyrocket. And if that happens, the exuberance of 2021 could well turn into the hangover of 2022.
Let’s take a look at data on early and late stage activity and what’s left of the exit market. We then examine how the data matches or does not match our expectations from interviews and news events from the first quarter.
Our old enemy – the lag in venture capital data – could play a role in the results. So, at the end of our work today, we’ll ask ourselves whether we expect the second quarter to be even more conservative than the picture we’re starting to paint for Q1 VC activity.
Where business slows down fastest
Normally we would pay more attention to year-over-year results than successive quarters when comparing venture capital performance. But in the wake of the venture capitalist in 2021, it is actually more reasonable to compare periods in time sequence. Why? Because things changed so much for the venture capital and startup worlds last year, comparing to results from a year ago is a bit more apples: oranges than looking at consecutive quarters.
But for the sake of completeness, we do both. As per Crunchbase News, the data looks like this: