Bad news: global venture capital funding in April fell again. Good news: it was not a nosedive

Global venture funding totaled $47 billion in April 2022, the lowest amount invested in private companies in the past 12 months, according to an analysis of Crunchbase data. Although the drop is not massive, it does indicate that the slowdown we saw in the first quarter of this year it is the beginning of a longer-term change in financing, especially in the later stages.

In total, April funding fell 10% month-on-month from $52 billion in March and 12% from $53.5 billion in April 2021.

Overall, a 10 to 12 percent drop in funding dollars isn’t a huge drop, especially considering that the April total still far exceeds funding in any month of 2020 between $5 billion and $29 billion. Dollars.

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But, the funding in recent months indicates that the environment is moving away from the record highs of 2021, when global funding doubled compared to 2020.

The opening of public markets in 2021, the unprecedented number of new technology listings and rising valuations led investors to value private companies at increasingly higher prices. That funding climate has cooled, but it hasn’t disappeared.

Looking at funding by stage, some more nuanced trends emerge:

  • Early-stage companies raised $3 billion in April 2022. Seed funding fell month-over-month, but still grew year-over-year by 14 percent;
  • Early-stage funding was the lowest in 12 months, at $14.3 billion. This funding stage fell month-over-month and was flat year-over-year compared to April 2021;
  • Late-stage funding, which tends to fluctuate more than any other stage, was flat month-over-month but decreased 19% year-over-year.

One trend that is clear from Crunchbase data: the largest decline per stage, year over year, is occurring in the final stage of funding.

Global financing by stage January 2020 to April 2022

Month-on-year decrease

Also notable: For the first time in more than a year, March and April 2022 funding showed a year-over-year decline for those months. By contrast, monthly growth rates in 2021 compared to 2020 ranged from 39% at the low end to 180% at the high end.

Year-over-year growth in global funding from January 2021 to April 2022

new unicorns

Another sign of the contraction in later-stage funding this year: New unicorn counts also fell year-over-year, with 34 new unicorns minted last month. That is less than the 51 created in April 2021.

Global count of new unicorns per month

Industries that raised the most in 2022

There are a few industries that continue to attract strong interest from venture capitalists. Those that have raised proportionally more dollars in 2022 to date compared to 2021 include blockchain, supply chain management, renewable energy, marketing technology, and gaming.

inflated valuations

Venture capital investments and growth in private companies doubled in 2021, raising concerns about inflated valuations and a bubble market. In that frenetic trading environment, some investors began to raise concerns about due diligence (or lack thereof) as funds closed faster and faster. Last year, many companies raised significantly higher valuations, sometimes months after their previous rounds.

This competitive investment market already shifted gears in the first quarter of 2022, and that trend continued into April. We expect that later-stage startups will need to focus more on revenue rather than growth, as they may not be able to raise funds as easily as they did in 2021.

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Methodology

The financing rounds included in this report are seed, angel, venture, corporate venture and private equity rounds in venture-backed companies. This reflects data in Crunchbase as of May 3, 2022.

Please note that all financing values ​​are in US dollars unless otherwise stated. Crunchbase converts foreign currencies to US dollars at the prevailing spot rate as of the date financing rounds, acquisitions, initial public offerings and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted to the historical spot price.

Illustration: Dom Guzman

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