The second quarter of 2022 brought a series of new stories to the U.S. venture capital (VC) ecosystem. While the initial narratives around the quarter revolved around inflation concerns and the tightening monetary environment. However, as the first half of the year came to an end, insights garnered from the Q2 2022 PitchBook-NVCA Venture Monitor data and interviews with members of the VC community have painted a more nuanced picture.
Q2 2022 deal value and count are down from Q1 as well as the all-time records of 2021. However, both metrics are at or above quarterly medians when compared to the last five years. Furthermore, as the market becomes more diverse – with record numbers of new managers, corporate venture capital funds, and crossover investors – it is now easier for capital to flow in and out of the market than ever before. This means that with an uncertain market environment, investors and founders will need to focus on value creation and capital efficiency to continue to fuel the nation’s innovation ecosystem.
2021 Was A Remarkable Year and Perhaps an Unsustainable Benchmark: While year-on-year quarterly deal activity is down across most sectors in Q2 2022, it is up across most sectors when compared to the Q2 median over the last five years. While the VC market is undergoing a correction, it’s clear that the record-setting numbers of 2021 are not the new normal.
The Exit Environment Is Mixed: With 8 VC-backed IPOs completed over the course of Q2, (Read more…)