Carta data shows the breadth of the slowdown, and early-stage startups are hardly immune
the descent of Venture capital’s torrid 2021 is sparing few startups.
New data from Carta, a provider of shareholder management services for private companies, indicates that the slowdown in venture capital activity is not limited to a single stage or sector. Instead, aggregate information detailing a series of Q1 2022 data points from Chart Head of Outlook Peter Walker indicates that even less mature startups will not be immune to a pullback in private market investment.
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The value of tech stocks began to decline in late 2021, a slide that continued into 2022, leaving many tech stores trading at a steep discount to their recent valuation highs. Since valuations of late-stage emerging companies are the easiest to compare with those of public companies, growth-stage investors were expected to change their pricing models and perhaps reduce their appetite for risk.
Some expected earlier-stage startups to do better than their later-stage brethren. However, the impacts of public market valuation changes (appreciating expected exit values for new companies, which may change their value in private investment rounds) are filtering through more than some expected. (TechCrunch explored some of this phenomenon over the weekend.)
And although there is talk among investors about how expensive some very The early stage rounds are, from seed onwards, it seems that no startup is safe from the effects of the slowdown.
Measurement of deceleration by series
Measuring the impact of a slowdown is more difficult when it comes to private companies. By definition, your financial information is private, which means we can’t know much about your revenue, margins, and variable earnings metrics, which, in the case of non-revenue companies, wouldn’t be very relevant anyway.
This makes the Carta data especially relevant to us: it provides us with the number of rounds and the total capital raised per series for startups in the first quarter. The caveat is that the data only covers startups using the platform, but we haven’t pinpointed a factor that makes them necessarily different from their non-Carta counterparts.
Let’s take a closer look at the data before unpacking what it means. The number of rounds per series in Card: