The pace at which venture capitalists are deploying funding across the globe slowed yet again in April.
Venture capital dollar volume, as tracked by Crunchbase News in a new report, peaked in November 2021. Since that apogee, the value of venture investments has ticked lower in most months before dropping another $5 billion from March to April.
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That the venture capital industry is pulling back should not be a surprise. TechCrunch covered falling startup valuations at most stages earlier this week, for example. Many companies that saw a pandemic boom are now enduring a return to Earth, further harming investor demand for previously hot categories, and some recent IPOs in tech sectors that have ample startup activity are suffering from sharp selloffs.
The data matters, however, not simply because it confirms our expectations of where venture activity is heading in 2022 – it also indicates that the change in the venture capital market will prove gradual to some degree, helping explain why Q1 2022 VC data was stronger than some anticipated. Because the slowdown in VC investments won’t be a single thunderclap, we expected to see more damage arrive in Q2 than we saw in Q1, and the Crunchbase News dataset underscores the perspective.
This morning, we’re parsing the latest numbers to better grok market sentiment around the current venture capital market. Which, as you will shortly see, is far smaller than it was just a few months ago.
A mixed but meaningful dip
Despite the 12-month low, we aren’t witnessing a dramatic dip. According to Crunchbase, the amount invested in private companies last month is only 10% lower than in March of this year. The year-on-year decline isn’t massive either, with April 2022’s tally only 13% inferior to April 2021’s.
The decline is also nuanced when looking at different investment stages. Seed funding actually increased by 14% year on year. But late-stage funding is down 19% year on year. Even though it was flat month on month, we think it is the latter figure that matters the most.