That slowdown you feel, by the numbers

It’s more than a feeling. According to new data from research firm Pitchbook and the National Venture Capital Association, venture capital firms are raising and deploying far less money than in recent years.

What should you know? The total number of transactions in the US fell by more than 25% from the first quarter of last year to this year. There were less than 3,000 deals between the start of the year and the end of March, which doesn’t sound too scary until you realize that things haven’t been that slow since 2018, relatively speaking (see chart below).

Late-stage deal value also dropped like a rock in the first quarter. While it’s clear from recent headlines that the “mega round” era has come and gone (for now), it’s another to read that late-round values ​​fell for the seventh straight quarter to $11.6 billion, according to Pitchbook and NVCA; The two say only 19 late-stage mega rounds took place in the first quarter of 2023, compared to a staggering 98 in the first quarter of 2022.

Not surprisingly, that slowdown, or right size, or whatever you prefer to call it, has had a ripple effect. In the first quarter, the average late-stage, preliminary estimate fell 16.9% from the full-year 2022 figure to $54 million, while the average preliminary estimate fell more than $100 million to $159, the firms disclosed. million.

The industry is increasingly being squeezed from all sides. According to the latest data, 11.7 billion dollars were closed in 99 venture funds in the first quarter of this year. most of that money has been raised by larger vehicles and the lion’s share, apparently, only by the NEA, which said in January it had closed with $6.2 billion in capital commitments for two new funds. Indeed, while only two venture funds closed at $1 billion or more in the first three months of this year, last year 36 funds closed with more than $1 billion in commitments.

At the same time that they’re raising less in the way of capital commitments, VCs’ portfolio companies are also stuck in a sort of exit purgatory. According to NVCA and Pitchbook, only $5.8 billion in exit value closed in the first quarter, which appears to be less than 1% of the total exit value generated in 2021 (it was a record year, but yeah). With the IPO window closed, with just 20 public listings in the first quarter, “pressure continues to mount within the ecosystem,” note the authors of this latest venture monitor report.

Stay tuned to know more; The organizations plan to release much more data next week. In the meantime, if you want to check out some of these figures for yourself, you can find them here .

Source link