UPDATED 00:01 EDT / JULY 07 2022


Pitchbook: VC deals still thriving despite values dropping in second quarter

The number of venture capital deals has continued to thrive in the first half of the year but the value of deals has dropped, according to a first-look release early Thursday from PitchBook-NVCA ahead of its quarterly Venture Monitor report next week.

PitchBook-NVCA says the number of deal counts has stayed relatively high across all stages, with seed rounds pushing toward recent highs at an estimated 1,400 deals. Momentum in venture capital investment has brought new deal announcements, which Pitchbook-NVCA notes is a more positive sign for the market than current industry narratives suggest.

Although the number of deals may be surprisingly strong, the overall economic situation and equities markets strongly influenced deal value. As the share price of publicly traded tech companies has declined, so has deal value declined across all stages, since the perceived price of startups is dropping relative to the market.

Pitchbook-NVCA notes that the outsized deals that became a theme of 2021 are not being completed as investors take a more cautious approach. The second quarter was the first since the fourth quarter of 2020 to post less than $77 billion in completed deal value, with only $62 billion closed.

VCs may be investing less in startups, but venture fundraising has not likewise slowed. VC fundraising topped $120 billion for the second consecutive year and saw the close of 203 funds worth $94.7 billion through the first six months of 2022. Thirty funds have closed on at least $1 billion in commitments, eight more than the previous full-year high of 22 last year.

Reflecting similar statistics in the previous quarter, the release notes that the initial public offering window remains closed, keeping exit values depressed.

As in the first quarter, the second quarter saw almost no traditional IPOs. In 2021, nearly 86% or $667.1 billion of recorded exit value was generated through IPOs, whereas IPOs have now come to a near-complete halt. Special-purpose acquisition company mergers, which for a brief period were highly popular in 2020 and 2021, have also suffered.

The total number of public listings for the first six months of 2022 now totals 42, described by Pitchbook-NVCA as minuscule. “This activity is most concerning for the billion-dollar exits, as public listings have been the main source of liquidity for that cohort of companies,” the release concludes.

Photo: Coolcaesar/Wikimedia Commons

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