PitchBook NVCA Venture Monitor Q3

Q3 2022 PitchBook-NVCA Venture Monitor

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PitchBook-NVCA Venture Monitor Q3 2022

Executive summary

Amid rising interest rates, fewer public listings, and the most complicated macroeconomic trends of the past generation, there is a broad desire to predict expectations in VC markets. With the end of Q3, there are easy answers and there are hard ones.
First, an easy answer: Broadly speaking, Q3 VC activity was below the historic heights of 2021 and early 2022. However, VC isn’t about panicking over quarterly fluctuations, and Q3’s activity is above historical averages and part of a durable, positive trend in the industry.
Some of the high points of 2022 have been seen in the healthcare, clean tech, energy, and transportation industries. Deal counts
across these four sectors at the end of Q3 are close to or above full-year numbers for 2020. Similarly, investments by crossover
investors and corporate venture capital (CVC) funds are all near or above 2020 totals. The mid-Atlantic, Southeast, and
Mountain regions have seen steady growth over the past few years, with all expected to exceed their 2020 totals.
Points of stress in the market are also appearing. This year, exits are down almost 50% against historical norms, with public
listings at record lows. In 2022, there have been just 59 public listings so far, compared with 303 in 2021 and 145 in 2020.
Fundraising is another possible point of tension. While overall figures are strong—the total capital raised at the end of Q3
2022 is $150.9 billion, just 2.6% away from the full-year 2021 record of $147.2 billion—62% of that total is going to 6% of funds.
Mega-funds are nothing new. However, there are questions as to how their continued growth will impact emerging managers
and ecosystems.
While Q3 has clarified several industry trends, its most durable legacy will likely be the passage of the Inflation Reduction Act
and the CHIPS and Science Act. These acts of Congress create huge investments in technology and infrastructure development.
Notably, they make hundreds of billions of dollars of public money available for investment over the coming years. Furthermore,
when combined with other projects such as the State Small Business Credit Initiative, these acts create an environment for
private fund managers to partner with the public sector and academia and develop more-robust entrepreneurial ecosystems
outside of traditional hot spots.
The facts of Q3 paint a mixed picture for the VC industry. Investors report that they are making deals, and there is a consensus
between managers and founders on how to prepare for potential challenges ahead. The market is also becoming increasingly
consolidated and realizing fewer exits than at any time in recent history. Recently enacted federal legislation promises to make
more funding available for managers and founders alike. Tracking the implementation of this legislation is a primary concern.
While some of the provisions in the packages (such as the research and development [R&D] tax credit expansion for startups)
will come into effect as soon as January 2023, other provisions are still far from implementation.
In summary, Q3 can provide reasons for optimism or pessimism, depending on where the viewer is looking. However, it has also
opened the door to a variety of opportunities for those who are paying attention.

3

Sponsored by

NVCA policy highlights
Lawmakers on Capitol Hill wrapped up a busy summer

Inflation Reduction Act

regulatory agenda that targets private funds,

with movement on several legislative priorities.

including the VC industry. Several board members

Below are key policy initiatives for NVCA and their

After a long and winding road, Democrats finally

met with SEC Commissioner Hester Peirce and

state of play.

coalesced around a package of climate, healthcare, and

Division of Investment Management staff in July to

tax provisions that they were able to pass along party

discuss the agency’s private funds proposal and how

lines. Despite a bumpy process, the end result was

it would negatively impact the VC industry.

CHIPS and Science Act

pretty ideal for the VC industry. We were able to avoid
Before departing Washington for the August

significant damaging tax increases on the industry and

Recently, NVCA submitted a supplemental comment

recess, Congress passed the NVCA-supported

secured targeted improvements to climate credits for

letter to address questions that arose during our

competitiveness legislation called the CHIPS and

startups. We also saw a small expansion of startups’

meetings about the true scope of the liability

Science Act. Signed by President Biden, the act

ability to offset payroll tax payments with unused R&D

limitation ban in the private funds proposal. The

represents the largest investment in research,

credits from $250,000 to $500,000.

letter clarified that the proposal goes much further
and referenced how the impact on the VC industry

technology commercialization, and domestic
production in at least a generation.
The legislation includes up to $250 billion for:
• Semiconductor research

Our outreach efforts included dozens of Hill meetings,

would be far more profound by discouraging

two research projects, individualized slide decks

new investments into unproven innovations and

for states and regions, in-state and virtual events

threatening the appropriate risk of actively engaging

and roundtables with policymakers, and significant

and managing portfolio companies.

coalition work with other affected industries.
We are continuing formal meetings with SEC

• Domestic manufacturing
• The establishment of a technology
commercialization directorate at the National

Tax increases considered but rejected during the

officials and policymakers on Capitol Hill and the

process include proposals to:

administration to discuss the full proposal’s negative
impact on the venture ecosystem.

Science Foundation (NSF)
• New test bed facilities for startups and
other entities
• Basic research at the NSF and the Department
of Energy
• A new regional technology hub program
• Programs to promote technology
commercialization and entrepreneurship at the
National Laboratories

• Tax capital gains as ordinary income
• Impose a surtax on those making more than
$5 million
• Create a mark-to-market tax regime

In July, the House passed a revised DEAL Act, a

• Impose an annual tax on private funds

longtime NVCA priority championed by Rep. Trey

based on AUM

Hollingsworth (R-IN) and Sen. Mike Rounds (R-SD)

• Impose a five-year holding period for carried
interest, with major technical issues
• Retroactively limit qualified small business stock to

NVCA has been heavily engaged in this package
since its original introduction. We provided
recommendations and encouraged policymakers
to leverage the unique capabilities of the American

DEAL Act

that directs the SEC to modernize the definition of a
VC fund for purposes of fund registration (read our
statement here).

30% exclusion
• Require companies majority-controlled by private
investment firms to file taxes as a single entity
• Aggregate the revenues of companies majority-

The original bill directed the SEC to consider
secondary investments as qualifying so long as the VC
fund maintained a “predominant” number of direct

startup ecosystem. We are thrilled to see that the

owned by private investment funds for purposes of

investments into private companies and to consider

final bill retains language requiring new company

determining the application of a book minimum tax

investments into other VC funds as qualifying as well.

formation as a primary objective for several programs.

(a 15% minimum tax rate for companies with more
than $1 billion in financial statement income)

Now that the bill has been signed into law, we are
shifting to an implementation strategy with the

We continue to engage and will update NVCA
members with further details as we learn more.

Financial regulatory proposals

various agencies and will begin rolling out a series of
events, collateral, and a more in-depth analysis of the

NVCA has continued engagement on Securities and

bill’s provisions to educate the NVCA membership.

Exchange Commission (SEC) Chair Gary Gensler’s

4

Overview
Deal count higher than expected
US VC deal activity by quarter

6,000

$100

5,000

$80

4,000

$60

3,000
$40

2,000

$20

1,000

$0

0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Q4

Q1

Q2

2018

Q3

Q4

Q1

2019
Deal value ($B)

Q2

Q3

Q4

Q1

Q2

2020
Deal count

Q3

Q4

Q1

2021

Q2

Q3

2022*

Estimated deal count

*As of September 30, 2022

Deal activity across all stages is
showing more signs of distress,
recording the third consecutive decline

2022 surpasses all years except 2021
US VC deal activity

17,867

in completed deals. Estimated deal
count in Q3 (4,074) is off by almost
20% from the quarterly record high
recorded in Q1 (5,049) and is the lowest
count seen in any quarter since Q4
2020 (3,364). Q3 saw $43.0 billion

9,968

10,964

11,687

12,051

11,416

10,560

13,076

11,871

12,813

8,082

$145.8

$168.7

$343.6

$194.9

2013

$145.1

historical basis.

$89.2

even if the numbers remain high on a

$83.8

2012

amid the global economic downturn,

$86.3

focus on business fundamentals

$49.7

of investor hesitancy and increased

$41.7

a nine-quarter low, cementing a tone

$73.8

invested in VC deals across all stages,

2014

2015

2016

2017

2018

2019

2020

2021

2022*

Deal value ($B)

Deal count

Nontraditional investors continued

Estimated deal count

*As of September 30, 2022

to reduce their activity in VC-backed
startups amid ongoing economic
uncertainty. Notably, deal count

nontraditional investor slowdown,

mega-deals were closed in Q3, the

participation has declined for all

especially by asset managers and PE

lowest total since Q3 2020.

nontraditional investor types except

funds, would be noticeable in the data

for corporate investors, which were

due to the reliance on these institutions

US VC fundraising has set a new annual

involved in more than a quarter

to complete mega-deals—87% of

high through only three quarters

of all completed deals in 2022. In

mega-deals received nontraditional

of 2022. US-based VC funds have

past reports we have noted that a

investor participation in 2021. Just 95

raised $150.9 billion, surpassing last

5

VC-backed IPO index continues underperformance
2022 US VC IPO index*
1.5x

1.0x

0.5x

0.0x

-0.5x
Jan

Feb

Mar

VC IPO Indexed Value

Apr

May

De-SPAC Indexed Value

Jun

Jul

Aug

Sep

Morningstar US Small-Mid Cap Broad Growth Extended Indexed Value

*As of September 30, 2022

year’s previous record and taking the

web-based design platform—the deal

$670.4 billion in exit value. With the

21-month fundraising total above $298.1

is not yet closed. Few options remain

expectation that the current slow

billion. Given public market turbulence

for the growing group of unicorns,

environment will remain, this year’s

and frozen avenues for liquidity, we

as 2022 has produced only 59 public

total exit value is in danger of falling

expected LPs to be concerned about

listings, just one year after a record 303

below $100 billion for the first time

their overexposure to this asset class

VC-backed public listings generated

since 2016.

and the potential for timely returns

year, we are finally beginning to see
that momentum atrophy, as just $29.4
billion in fundraising was added to the
dataset since our Q2 report, the lowest
quarterly total this year.
With just $14.0 billion in exit value
generated across an estimated 302
exits in Q3, there were few bright
spots for the VC exit market. These
figures are in line with exit activity
expectations around 2014 and well off
the highs seen in 2021—$266.8 billion
in exit value was generated in Q2
that year. A highlight of the quarter is

Market quickly swinging back to being investor friendly
US VC dealmaking indicator
Investor friendly

activity. Entering the second half of the

Startup friendly

negatively impacting fundraising

100
90
80
70
60
50
40
30
20
10
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017

2018

2019

Early-stage normalized smoothed index

surely Adobe’s announced $20 billion

2020

2021

2022*

Late-stage normalized smoothed index

*As of September 30, 2022

acquisition of Figma, a developer of a

6

Diversifying,
educating,
and
Shaping
the future
empowering the VC investor
of venture capital
class to advance the industry
and maximize impact and returns

ventureforward.org
Venture Forward is a 501(c)(3) supporting organization to NVCA.

Venture Forward is a 501(c)(3) supporting
organization to NVCA.

NVCA EMPOWERS
THE NEXT GENERATION
OF AMERICAN COMPANIES
As the leading trade organization
in this country, NVCA provides
a wealth of resources for VCs,
including access to exclusive data,
education, connecting with peers,
and shaping the policy agenda.
Beth Seidenberg

Founding Managing Director
of Westlake Village Biopartners

Become a NVCA member today | www.nvca.org

Angel & seed
Angel & seed activity slides

US angel & seed deal activity by quarter
2,500

$7
$6

2,000

$5
$4

1,500

$3

1,000

$2
500

$1
$0

0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Q4

Q1

Q2

2018

Q3

Q4

Q1

Q2

2019

Q3

Q4

Q1

Q2

2020

Deal value ($B)

Deal count

Q3

Q4

2021

Q1

Q2

Q3

2022*

Estimated deal count

*As of September 30, 2022

Q3 was a bit less resilient compared
with the first half of the year, when
deals for seed investments were
completed at an unwavering pace. This

Seed deals showing strength
US angel & seed deal activity

7,000

$20

quarter saw a decline of around 18%
from the Q1 high, dropping angel & seed

6,000
$15

5,000

deal activity back to 2020 levels. Seed
companies are relatively less impacted
by public markets than late-stage

3,911
$10

3,000

companies, so the quick shift in activity

2,000

$5

705

nature of the 2021 seed market. Once

number of micro-funds raised since the
beginning of 2021 (779).

1,000

Angel deal value ($B)

Seed deal value ($B)

Angel deal count

2021

2020

2019

2018

2017

2016

2015

0
2014

will find tailwinds from the record

$0
2013

investment climate, seed activity

2012

the market returns to a more normal

2022*

points more toward the unsustainable

4,000

Seed deal count

*As of September 30, 2022

Despite a slowdown in activity, core
data points from seed investments have
remained at the heightened levels set

as the current quarter’s deal size and

more selective in their investments in

in 2021. The median seed deal size for

pre-money valuations were both the

this economic climate, this massive

2022 sits at $2.8 million after Q3, and

highest in our dataset at $3.5 million

growth in seed-stage participation

the median pre-money valuation for

and $10.1 million, respectively.

continues to put upward pressure on

seed investments reached $10.5 million.

deal sizes and valuations. Not only are

These figures aren’t leaning on the

While the strength of valuations could

there more micro-funds, but also larger,

strong numbers from Q1 and Q2 either,

be due to investors in the market being

multistage investors have increased

8

Median angel deal values flat

Seed deal values continue rise

$1.5

$6

Range of US angel deal values ($M)

Range of US seed deal values ($M)

$5.0

$5

$1.0
$1.0

$4.6

$4

$2.8

$3

$0.6
$0.5

$2

$0.3

$1.1

$1

$0.1
$0.0

Average

75th percentile

Median

25th percentile

Average

75th percentile

Median

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

$0

25th percentile

*As of September 30, 2022

their activity. Tiger Global, for example,

do not have estimates for first-time

likely further to fall from an activity

has been a part of 15 US seed deals

financings as we do for other stages of

standpoint, but the growth of the seed

announced in 2022, nearly double

VC, but already our team has captured

and first-financing market over the

the total number of US seed deals the

more first financings than almost any

past several years has lifted the floor

company had participated in previously.

quarter before 2021, and that total is

of expectations. These deals are much

expected to grow. The unexpected

further from macroeconomic volatility,

Congruently, first-time financing data

strength of first-financing activity is

though we shouldn’t expect this stage

shows that Q3 was slower than recent

positive news for the industry.

of companies to remain immune from

periods, though the number of deals

the impacts as headwinds continue.

captured by the end of the quarter was

Given the lag between industry

off by just 5.8% from last quarter. We

narratives and data trends, there is

Seed valuations well above 2021

Nearly $19 billion in first financings YTD

Median US angel & seed pre-money valuations ($M)

US first-financing deal activity
$30

$10.5

$25
$20

$15.7

$15.2

$15.0

$24.6

$18.9

2019

2020

2021

2022*

2022*

2021

2020

2019

2018

2017

2015

2014

2013

2012

2016
Angel

2018

$0

$0

$9.6

1,000

2017

$5

$9.3

2,000

2016

$10
$9.4

$2

4,000
3,000

2015

$3.5

$4

3,497

$15

$8.2

$4.9

2014

$6

$7.3

$8

5,000
3,871 3,780 3,864
3,787 3,735
3,338 3,522 3,466
3,276

2013

$9.0

$6.7

$10

6,000

5,275

2012

$12

Deal value ($B)

Seed

*As of September 30, 2022

0

Deal count

*As of September 30, 2022

9

Early-stage VC
Q3 reinforces negative quarterly trend of early-stage deal activity
US early-stage VC deal activity by quarter
$35

1,600

$30

1,400
1,200

$25

1,000

$20

800

$15

600

$10

400

$5

200

$0

0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Q4

Q1

Q2

2018

Q3

Q4

Q1

Q2

2019
Deal value ($B)

Q3

Q4

Q1

2020
Deal count

Q2

Q3

Q4

Q1

2021

Q2

Q3

2022*

Estimated deal count

*As of September 30, 2022

The dust had yet to settle as earlystage VC activity trended downward
for the third quarter in a row, with
roughly $13.5 billion invested across

Early-stage deal count on pace to surpass
pre-pandemic figures
US early-stage VC deal activity

5,312

an estimated 1,226 deals. However,
the current year’s early-stage VC
investment is roughly $55.8 billion,
already surpassing the 2020 full-year
figure of $45.0 billion, suggesting
the long-term growth for early-stage

3,225

3,371

3,487

3,165

3,523

3,613

3,753

4,031

3,480

2,713

investment remains positive. Now that
we are well into 2022 and roughly six

capital deployment in early-stage

$25.6

$30.3

$41.6

$44.9

$45.0

$87.6

$55.8

public market volatility has weakened

$26.2

materialize in the data. The continued

$21.7

in prior quarters is slowly starting to

$16.8

March, the reporting lag highlighted

$14.0

months past the inflationary surge in

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022*

Deal value ($B)

deals as investors become more

Deal count

Estimated deal count

*As of September 30, 2022

apprehensive about the large, outliersized deals of the past couple years.
Investors are focusing on investing in

Early-stage investors can no longer

last few quarters resulted in a median

the fundamentals of a startup instead

make investments under the pretense

early-stage deal size of $8.9 million in

of relying on another VC firm to invest

of growth as seen in the robust

Q3, a 19.7% decrease from the prior

at an even higher valuation.

valuation environment of 2021. The

quarter’s median early-stage deal size

increase in investor prudence over the

of $11.0 million. The decrease in median

10

YTD deal values remain afloat despite
QoQ decline

YTD early-stage valuations maintain lead
above historical figures

Range of US early-stage VC deal values ($M)
$25
$20

Range of US early-stage VC pre-money valuations ($M)
$23.8

$160

$23.2

$140

$140.7
$115.0

$120
$100

$15

$80

$10.0

$10

$55.0

$60
$40

$5

$2.4

$25.0

$20

75th percentile

Median

25th percentile

Average

75th percentile

Median

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

Average

2015

$0

$0

25th percentile

*As of September 30, 2022

deal size is likely the result of depressed

value of $5.5 billion. Mega-round deals

long-term trend, yet remains robust for

public market exit conditions finally

accounted for 40.7% of the total capital

strong companies. We expect investors

breaking through the insulated early

invested across early-stage VC in Q3.

will look to mitigate risk by backing serial

stage and affecting valuations. Startup

This quarter’s mega-round activity falls

entrepreneurs, some of whom raise

founders may be opting to raise smaller

short of the 2021 quarterly average of

outsized rounds in the early stage; such

amounts of capital in an effort preserve

42 rounds yet is still above 2020’s figure

is the case with Andreessen Horowitz’s

equity and to simply bridge the gap until

of 17, reinforcing the notion that the VC

reported $350.0 million investment in

the market resumes its strength.

market is returning to the pre-pandemic

Adam Neumann’s latest startup, Flow.

Contrary to the H1 2022 growth

Early-stage capital availability falling

valuations, Q3 exhibited signs of a
slowdown, with a median pre-money
valuation of $46.0 million. This figure
represents a 16.4% decrease from the
Q2 2022 median of $55.0 million and
is more on par with the 2021 full-year
figure of $44.0 million. We expect
early-stage pre-money valuations to
continue their descent through the end
of the year as the market searches for a
new equilibrium.
Evidence of a slowdown in the early
stage can also be seen in the number

Capital supply-demand ratio in the early-stage VC marketplace
Dollars of supply to dollars of demand

of median early-stage pre-money

$14
$12
$10
$8
$6
$4
$2
$0
Q1

Q3

Q1

2017

Q3

Q1

2018

Q3

Q1

2019

Q3
2020

Q1

Q3
2021

Q1

Q3

2022*

Early-stage VC

of mega-rounds completed. 24 earlystage mega-rounds ($100 million+) were

*As of September 30, 2022

completed this quarter, with a total deal

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Late-stage VC
Q3 deal value plummets in response to continued depressed exit conditions
US late-stage VC deal activity by quarter
$70

1,800

$60

1,600
1,400

$50

1,200

$40

1,000

$30

800
600

$20

400

$10

200

$0

0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Q4

Q1

Q2

2018

Q3

Q4

Q1

Q2

2019
Deal value ($B)

Q3

Q4

Q1

Q2

2020
Deal count

Q3

Q4

Q1

2021

Q2

Q3

2022*

Estimated deal count

*As of September 30, 2022

Current avenues for startup liquidity
remain relatively frozen, further
constricting late-stage deal activity in

YTD late-stage deal value ahead of 2020 full-year figure
US late-stage VC deal activity

5,360

Q3, resulting in $24.9 billion invested
across an estimated 1,249 deals. The

4,238

total dollars invested in late-stage
VC decreased by 48.3% from the

3,543
3,082

Q2 figure of $48.1 billion and set a

capacity to generate positive free cash

$112.5

$237.2

$122.5

2013

$90.0

valuations to balloon beyond their

2,628

$92.7

has caused startup headcounts and

2,375

$51.1

2012

historically implemented. Blitzscaling

2,468

$51.6

$28.8

disregarding the scaling processes

$24.9

heightened investor support to grow,

2,385

$53.6

1,925

the surplus of available capital and

2,142

$47.0

record 11-quarter low. Over the past
two years, startups have leveraged

3,707

2014

2015

2016

2017

2018

2019

2020

2021

2022*

Deal value ($B)

flow and loosen their dependence on

Deal count

Estimated deal count

*As of September 30, 2022

investor capital. Depressed public
market comparables have even led
nontraditional investors to internally

VC GPs have been hesitant to mark

The median late-stage deal value

mark down portfolio companies; such

down portfolios due to the impact it

continued to fall through the third

is the case with T. Rowe Price writing

could have on their ability to attract

quarter to $10.0 million, a 33.3%

down its investment in Canva, a unicorn

new fund commitments as well as the

decrease from the 2021 full-year figure

startup developing an online graphic

ability of their portfolio companies to

of $14.6 million. This decrease seems

design platform, by 44% since the

raise subsequent financing rounds at

significant in the context of the prior

end of 2021. Anecdotally, traditional

increased valuations.

year’s activity but is equal to the 2020

13

YTD median and average deal values fall
below 2021 values

YTD median valuations creep closer to
2020 full-year figures

$60

$800

Range of US late-stage VC deal values ($M)

Range of US late-stage VC pre-money valuations ($M)

$700

$50

$582.1

$600

$39.6

$40

$500
$35.0

$30

$400

$322.5

$300

$20
$10

$11.5

$200

$3.1

$100

$0

$91.0
$31.0

Average

75th Percentile

Median

25th Percentile

Average

75th Percentile

Median

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

$0

25th Percentile

*As of September 30, 2022

full-year median deal size, suggesting

portion of the total invested capital to

2021 full-year figures to $91.0 million,

that the repricing of late-stage VC deals

derive from those rounds until public

corroborating the notion that investors

may be falling below the long-term

markets become a viable path to liquidity

are less confident in this area of the

growth trend. Despite the decrease, we

once again.

market. While valuations remain

have yet to see down round activity pick

significantly higher than median

up in the data. Naturally there is a lag in

Furthermore, the impact of depressed

valuations seen in 2020 and earlier, we

reporting that limits our insight into down

exit conditions can be seen in the

expect this figure to continue to decline

round activity as well as the incentive for

softening of late-stage pre-money

as the market resets and public markets

founders to withhold funding information

valuations. Late-stage pre-money

remain volatile.

that could unfavorably portray their

valuations YTD have dipped below

businesses. We expect down rounds to
become more prevalent should current
market conditions continue or worsen

Late-stage capital supply hits low

Capital supply-demand ratio in the late-stage VC marketplace

Alongside the decrease in median deal
sizes, this quarter also saw a drop in the
number of mega-rounds completed.
In Q3 there were 67 mega-rounds
completed at the late stage, with a
total deal value of $11.9 billion. As to
be expected, mega-rounds drive a
significant portion of the deal activity in
the late stage, but that portion of deal

Dollars of supply to dollars of demand

through the end of the year.

$14
$12
$10
$8
$6
$4
$2
$0

value is starting to wane in response to

Q1

the lack of liquidity in public markets.

2017

We expect the increased scrutiny of

Q3

Q1

Q3

Q1

2018

Q3

Q1

2019

Q3
2020

Q1

Q3
2021

Q1

Q3

2022*

Late-stage VC

late-stage startups to result in fewer

*As of September 30, 2022

mega-rounds completed and a smaller

14

Sponsored by

A WORD FROM INSPERITY

DE&I Considerations to Strengthen the Venture
Capitalist’s Portfolio
• Recent changes in awareness of social justice
and the effects of the COVID-19 pandemic have

better working and living conditions may increase

Sonya Mack

human capital risks in VC investments.

Director of Diversity,

increased the need for companies to review and
strengthen their approach to diversity, equity,

DE&I is more than an occasional agenda item,

and inclusion (DE&I).

ancillary program, or problem to be addressed. It

• Venture capital (VC) firms can exemplify

is a strategic business imperative—a key pillar in

high standards of care for women and

successful human capital strategy. When woven

underrepresented populations by calibrating

into the fabric of company strategy, leaders

their own internal DE&I efforts.

view the organization through the powerful

• Portfolio partners can be influenced to improve

lens of caring for their people. They work to

their care for diverse employees when venture

ensure fairness and equity in the development

capitalists raise their investment criteria to

of their workforce and universal employee

include embracing DE&I.

well-being by adopting flexibility, acceptance,

• The benefits that accrue to companies that care

and accommodations for all. They also train

Equity, and Inclusion
Sonya Mack is the
Director of Diversity,
Equity, and Inclusion
(DE&I) Services with
Insperity, and responsible for leading the DE&I
consultative services. Her passion for DE&I has
spanned the course of her career within non-profit
organizations and corporations. Sonya earned her
BBA in organizational behavior and management
from the University of Houston and is certified in
DE&I in the Workplace.

for their people include increased productivity,

and hold managers accountable for their ability

employee loyalty, innovative thinking, and a

to effectively listen and be empathetic toward

strong brand.

their team. This creates a preferred employer

Venture capitalists can empower their portfolio

relationship that elicits employee discretionary

companies to advance fairness for employees

The impact of multiple history-defining political

effort and is difficult to replace by going

from marginalized backgrounds and women.

and economic events and movements taking place

elsewhere.

This will result in employee loyalty, competitive
advantages, productivity enhancements, strong

over the last few years has brought to the forefront
a call for action to eliminate prejudice and

How can venture capitalists integrate DE&I into

public perception, and improved access to

injustice in the workplace. Business leaders and

their portfolios?

suppliers and vendors.

Having DE&I as a strategic competency focuses the

Consider these questions:

investors have begun taking a more intentional
look at opportunities to increase representation
of underrepresented groups (diversity), to ensure
fair and accessible opportunities and resources
for all employees (equity), and to create more
inclusive company cultures (inclusion). For venture
capitalists, evaluating and improving the employee
experience may mean the difference in achieving
their long-term investment goals.
Why should venture capitalists care
about DE&I?

venture capitalist on better deals and enhances the
value they bring to their partners. To create this

• Can you strengthen your investment criteria

internal competency, venture capitalists should

through self-assessment, feedback from

intentionally look within their own organization

portfolio companies, and industry benchmarks?

for opportunities to increase representation of
underrepresented groups, ensure fair access to
resources and opportunities, and create a more
inclusive company culture. This is a process, not a
one-and-done project.

• Do your investment requirements reflect
diverse founders and equitable opportunities
for women and underrepresented groups?
• Do you evaluate the inclusiveness of a startup’s
human capital practices?
• Do you expect partners to establish employee-

With a DE&I competency, venture capitalists

friendly values, cultures, processes, procedures,

Employees’ expectations have been dramatically

can model practices that demonstrate the value

systems, and practices?

changed by pandemic-related challenges, racial

of promoting diverse peoples, viewpoints, and

unrest, and the economic downturn. No longer are

experiences. They can steer portfolio companies

What framework can be used to adopt DE&I into

they willing to tolerate poor treatment or work

to more inclusive strategies by adopting DE&I-

company strategy?

where they feel disadvantaged. The significant

centric investment criteria. They can condition

reduction in the available workforce and a new

deals that influence startups to structure practices

A flash cut adaptation of strategy to a full-on DE&I

willingness to resign from long-held positions for

and strategies that lead to progressive change.

focus is not likely. Such an approach would

15

Sponsored by

likely miss or mistreat most of the specific root

constructed job descriptions that accurately

resource groups and advance the adoption

issues that need addressing. However, remember

reflect work expectations. Annually agreed

of a DE&I committee, expanded recruiting

that employees are increasingly looking for

upon performance objectives should be fair and

perspectives, distributed training opportunities,

real attention, genuine concern for people, and

unbiased. Regular data-supported performance

and the creation of safe spaces for employees to

commitment to these principles.

reviews should fairly evaluate progress and

share ideas and concerns.

provide genuine feedback, including any
DE&I solutions must be thoughtfully developed

developmental needs which in turn result in

and implemented. It begins with changes in

training and development plans.

practices, then underlying policies, and eventually

• Training and development. The level of

Conclusion
At Insperity we follow the example of our founder

being written into overarching strategies

company commitment to DE&I principles can be

and CEO Paul Sarvadi in supporting, valuing,

supported by key metrics that sustain progress.

measured by the developmental opportunities

and caring for our people. We have experienced

afforded diverse employees. Human capital

firsthand the power and economic benefits of a

We suggest using the employee life cycle

strategies should require equal and fair access

diverse and empowered workforce. VC firms can

to guide the transition to a more strategic

to individualized development resources that

strengthen their own companies and introduce

DE&I organization:

help each employee progress and reach their

these benefits to their partner companies by

highest potential. The developmental plan is

elevating DE&I strategies and initiatives.

• Culture of well-being. Create a culture of
inclusion and belonging that boldly affirms
that all people are valued, respected, and
supported. Develop an understanding of the
employee experience, including the varied
impacts from family obligations, economic
struggles, challenges associated with ethnicity,
gender, sexual orientation, and physical or
mental health, among others. Evaluate how the
current company culture treats these issues and
engineer changes where needed to provide due
consideration to individual well-being.
• Attracting and recruiting. Expanding employee
searches to reach more candidates from
underrepresented groups is more practical
now than ever before. Remember, diversity of
thought and experience is powerful. The shift
to remote work has provided employers’ access

a key indicator that people are valued by the
company. Regardless of employee position
or level, turning their specific developmental
needs into strengths will increase their
contribution and bring added value to the firm.
any level is expensive and time consuming.
Reviewing reasons for leaving may reveal that
employees from underrepresented groups
are leaving at a higher rate than others. They
may have felt under-appreciated or that their
progression was capped. While some people
leave for better opportunities, these reasons
should be immediately addressed.
How can a VC firm create a focus on employee
well-being?
The whole intent of infusing DE&I into company

geography. No longer must they try to persuade

strategies is to access the power of fair and

a diverse candidate to move away from their

equitable employee treatment and accrue its

cultural home or family to work onsite.

value to the company. Intentional and successful
strategy development requires clear goals,

first impression of the firm and a key indication

leadership commitment, effective change

of the company’s commitment to their

management, and impactful communications.

individual success. It folds them into the society

During start up, most founders are scrambling to

of their new peers and impresses the culture

establish and secure funding for their company,

upon them. Assigning a temporary mentor or

having little time to consider people-focused

host will help familiarize new workers with the

initiatives. Venture capitalists can bring an

work requirements, resources, and coworkers.

increased awareness of people’s needs and

• Performance and progression. High
performance begins with clear and carefully

your VC firm and your partners, contact Insperity
at: Randy Fisher, Private Capital Development
Director, randy.fisher@insperity.com.

• Employee retention. Replacing workers at

to diverse candidates beyond their immediate

• Onboarding. Onboarding is the new employee’s

For more on bringing the benefits of DE&I to

expectations and suggest ideas to strengthen
human strategies. They can establish employee

16

Insperity has helped
thousands of startups
by providing HR solutions to help them gain a
competitive advantage for talent and providing the
HR infrastructure they need to support their growth.
Insperity believes startups are critical to the vitality
of the American economy, and we’re eager to work
alongside up-and-coming companies who share
that belief.

Regional spotlight
California markets leading the way*
Seattle

Boston

Q3 deal count: 95
Q3 deal value: $1.6B

Q3 deal count: 184
Q3 deal value: $3.9B

New York

Chicago

Bay Area
Q3 deal count: 586
Q3 deal value: $11.8B

Q3 deal count: 81
Q3 deal value: $790.7M

Denver

Q3 deal count: 449
Q3 deal value: $5.7B

Philadelphia
Q3 deal count: 103
Q3 deal value: $681.1M

Q3 deal count: 88
Q3 deal value: $1.1B

Los Angeles

Washington, DC

Q3 deal count: 321
Q3 deal value: $7.1B

Q3 deal count: 86
Q3 deal value: $772.4M

San Diego
Q3 deal count: 67
Q3 deal value: $1.0B

Austin
Q3 deal count: 70
Q3 deal value: $701.2M

Miami
Q3 deal count: 75
Q3 deal value: $1.3B

*As of September 30, 2022

Deal values outside major markets lag

Valuations lower outside of Bay Area

$20

$70

Median early-stage deal value ($M) by CSA

Median early-stage pre-money valuation ($M) by CSA

$60

$15

$50
$40

$10

$30
$20

$5

$10

$0

Bay Area
Boston

New York
Rest of US

Bay Area
Boston

Los Angeles

*As of September 30, 2022

New York
Rest of US

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

$0

Los Angeles

*As of September 30, 2022

17

Sponsored by

A WORD FROM J.P. MORGAN

The evolving venture landscape
“As they contend with ongoing market volatility

We have begun to see compression in private

and declining growth forecasts, startups and

company valuations over the past six months,

investors are still trying to find their footing on

following the sell-off in public equities—and

Head of Research,

valuations. Founders will likely face some tough

tech stocks in particular—that began late last

Commercial Banking

choices in the coming months as they work to

year. With ongoing volatility, both public and

Ginger Chambless is

position their companies for long-term success.

private markets are trying to find their footing

a Managing Director

For those with ample runway, now is a good time

on valuations. If earnings expectations are reset

and Head of Research

to block out the noise and build.”

meaningfully lower in the coming months, it is

—Pamela Aldsworth, Head of Venture Capital

possible valuations could see more downside.

Commercial Banking. In this role, she produces

Coverage for J.P. Morgan Commercial Banking

Either way, companies early in their journey

curated thought leadership content for commercial

should be less hindered with time on their side
After the initial onset of the market

banking clients and internal teams. Her content

to build and grow into a higher valuation. For

downturn earlier this year, we have observed

focuses on economic and market insights, industry

Series B and later, the valuation reset process

several interesting developments.

trends, and the capital markets.

is more challenging given the vastly different

Reforecasting exercises are taking on greater

Ginger Chambless

for JPMorgan Chase

environment since most [of these companies]

Additional contributors:

raised their last round.

Pamela Aldsworth

importance in the current environment given
the outlook for slowing economic growth,

The concerns of venture players have

higher interest rates, and reduced investment

evolved over the course of the year.

activity. The budgeting season is underway,

Head of Venture Capital Coverage
Andy Kelly
Managing Director, Venture Capital Coverage

and we expect many startups will lower growth

One of the most noticeable areas that shifted

expectations and place extra focus on bottom-

was thinking around labor force. Early in the

and markets quickly resumed the up and to the

line stability for the year ahead. It’s not a

year, the war for talent was a top challenge

right trajectory. Now, we could be entering the

growth-at-all-costs environment anymore.

cited by startups, and many were paying up to

acceptance phase for valuations. While down

In software specifically, it’s possible that YoY

recruit and retain engineers and data scientists.

rounds have risen to 7% to 8% in recent months

revenue projections could come down from

As the year progressed, the narrative shifted

from 5% earlier in the year, it’s likely valuations

80%-100% to 40%-60%.

to slowing hiring plans and, more recently,

will continue trending lower, as startups that

outright reductions in [labor] force. On this,

last raised in early to mid-2021 come to market

Also, portfolio triaging is definitely going on

it’s usually best to be decisive and conservative

over the next two to three quarters. Even the

inside the VC world. We are seeing a flight to

so that the remaining team can refocus on the

Seed stage appears to be capitulating after

quality, where the best-performing companies

business without an overhang of additional

exhibiting resilience for much of 2022. In all

are receiving continued investment, in-line

layoffs in a few months’ time. We expect labor

cases, the top end of the market has come

performers are getting bridged to carry out

force reductions across the startup ecosystem

down the most, which logically correlates with

reforecast plans, and underperformers are

to approach 10% to 20% by the end of the year.

the pullback from crossover investors whose

being put to market for the best possible

positioning was concentrated in the

outcome. At this stage, the financial and

Thinking around valuations and liquidity has

reputational strength of the VC firms at

also evolved. Several months ago, it might

the board table will play a meaningful role

have been reasonable to wait out the markets

Lastly, early in the year there was very little

in effecting a sale or funding across any

and pass on additional capital at a flat or down

discussion about recession risk, higher interest

liquidity gap.

round, hoping the pullback was short-lived

rates, or slowing customer demand. With

18

top-tier names.

Sponsored by

negative GDP growth in the US through the first

deals are on the sidelines waiting to test the

Not surprisingly, direct to consumer (D2C) was

half [of the year] and high inflation pinching

market. There has been limited confidence to

a sector that greatly benefited from above-

purchasing power, startups reliant on strong

transact M&A in this climate, as it could be

trend consumer spending on goods during the

consumer spending are facing headwinds. A

viewed as a capitulation or a portfolio-clearing

pandemic. As consumer spending patterns

broader shift in consumer spending patterns

event.

normalize and the risk of recession remains

from goods—which were above trend during

elevated, many companies in the D2C space

2021—to services has been underway in recent

At the same time, Raby indicates that sponsor-

have followed their public comps in a downward

months and likely to persist. Plus, with 300

backed private companies with healthy balance

trajectory, and VC investing in new companies

basis points of interest rate hikes since March

sheets are thinking increasingly about one-

has waned.

and another 100 to 150 basis points possible

to-one partnerships / mergers with similar-

over the next few quarters, this is a meaningful

sized companies to grow ahead of a potential

increase to borrowing costs for young

reopening of the IPO market in 2023. In these

companies with debt.

types of combinations, financial benefits are
being prioritized over an absolute strategic fit.

Our early thinking about the exit market
environment as we head into 2023 is that a

Larger sponsor-backed companies are being

pick-up in M&A is likely.

aggressive in portfolio building and looking
for opportunities to expand platforms via

We will likely need to see volatility in the equity

acquisition versus building solutions to

and credit markets subside from elevated levels

compete. Nontraditional sponsors are looking

for the IPO market to reopen in any meaningful

into entering markets previously seen as

way, according to Michael Millman, Global

unaffordable. For example, sponsors are

Chair of Investment Banking. In the meantime,

spending more time getting up to speed

select IPO issuers who have size and scale,

on cyber and cloud, which are increasingly

combined with a profitable financial profile,

recognized as evergreen sectors.

could evaluate the merits of executing a nearterm IPO. But with limited recent precedents,

Raby expects that a pickup in M&A activity

assessing how IPOs as an asset class price and

will precede a return of the IPO markets and

trade will be another important barometer of

that dual-track late-stage fundraising / M&A

investor sentiment.

processes will be standard practice going
forward. With dilution even more challenging at

Regarding M&A activity within the venture-

compressed valuations, a sale may become the

backed space, JC Raby, Head of Emerging

preferred path.

Technology Investment Banking, notes that
even though deal flow across the technology

Some companies and sectors are still raking in

sector is down an estimated 35% to 45% amid

funding successfully during this time frame,

the choppy market backdrop, strategic dialogue

while other areas are more challenged.

is more robust than ever. Strategic buyers
want to do deep dives on sectors and early /

VC into transformational spaces continues,

growth-stage companies to understand what

including cyber, artificial intelligence, and cloud

might be actionable with calmer waters and

infrastructure. Given elevated geopolitical tensions

less perceived competition from well-funded

and the penetration of tech-enabled solutions

sponsors or more speculative venture investors.

across industries and government, demand for

While a few blockbuster transactions have been

these areas remains exceptionally high.

announced recently, many [small to midsize]

19

© 2022 JPMorgan Chase & Co. All rights
reserved. JPMorgan Chase Bank, N.A.
Member FDIC.
Visit jpmorgan.com/cb-disclaimer for full
disclosures and disclaimers related to
this content.

Biotech & pharma
More than $20 billion invested in biotech &
pharma through Q3

Growing proportion of deals to late stage
Share of US biotech & pharma VC deal count by stage

US biotech & pharma VC deal activity

100%

1,384

Late-stage VC

90%
1,110
874
543

678

633

753

1,010

926

Early-stage VC

80%

Angel & seed

70%
60%

738

722

50%
40%

$23.8
2022*

0%

*As of September 30, 2022

Valuations are up too

values ($M)

valuations ($M)

Median and average US biotech & pharma VC deal

$160

$36.7

$120

$25

$100

$20

$80
$60

Average

Median

*As of September 30, 2022

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

$0
2016

$0
2015

$20

2014

$5

2013

$35.0

$40

2021

$9.8 $10.0

2012

$112.0

$45.0

2022*

$30

Median

$144.0

$140

$31.7

$10

2022*

Median and average US biotech & pharma VC pre-money

$40

$15

2021

*As of September 30, 2022

Deal values still growing

$35

2020

2019

2018

2017

2016

2015

Deal count

2014

10%
2013

$38.0
2021

$28.7
2020

2019

$17.9

$20.1

20%

2012

Deal value ($B)

2018

$13.1
2017

$10.2
2016

$11.0
2015

2014

$8.3

$6.4
2013

2012

$5.3

30%

Average

*As of September 30, 2022

20

Enterprise tech
Enterprise tech investment slows heavily
from 2021

Early-stage deals see declining proportion
Share of US enterprise tech VC deal count by stage

US enterprise tech VC deal activity

100%

7,941

Late-stage VC

90%

4,446

4,873

5,147

4,787

5,227

5,749

6,130

5,882

Early-stage VC

80%

Angel & seed

70%

4,748

60%

3,528

50%

$102.4

20%

2022*

0%

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

Deal count

2013

10%
2012

$190.0
2021

$82.8
2020

$76.3

$68.8

2019

2017

Deal value ($B)

2018

$42.0

$43.8
2016

$41.3
2015

$37.7

30%

2014

$23.3
2013

2012

$19.6

40%

*As of September 30, 2022

Average deal value falls in 2022

Valuations remain high

Median and average US enterprise tech VC deal values ($M)

Median and average US enterprise tech VC pre-money
valuations ($M)

$30

$28.3

$450

$25.7

$384.4
$373.9

$400

$25

$350

$20

$300
$250

$15

$200

$10
$5.0

$150

$6.0

$100

$5

$34.0 $40.0

$50

$0

Median

Average

Median

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

$0

Average

*As of September 30, 2022

21

Consumer tech
Consumer tech struggles

Seed deals continue decline

US consumer tech VC deal activity

Share of US consumer tech VC deal count by stage

Early-stage VC

80%

Angel & seed

70%

2,534

3,290

3,497

3,320

3,112

2,818

3,204

3,082

2,615

Late-stage VC

90%

60%

$41.7

20%

2022*

0%

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

Deal count

2013

10%
2012

$104.4

$52.2
2020

30%

2021

$46.5

$59.7

2019

2017

Deal value ($B)

2018

$27.9

$30.7
2016

$27.6

40%

2015

$20.9
2014

$11.9

50%

2013

*As of September 30, 2022

Average deal value falls back to
pre-pandemic levels

Median consumer tech valuation rises
Median and average US consumer tech VC pre-money

Median and average US consumer tech VC deal values ($M)

valuations ($M)

$30

$400

$27.2

$355.2

$350

$25

$20.2

$298.0

$300

$20

$250

$15

$200
$150

$10
$3.5 $4.1

$100

$33.0
$25.0

$50

Median

Average

Median

*As of September 30, 2022

2022*

2020

2019

2017

2016

2015

2014

2012

2013

$0

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

$0

2021

$5

2018

2012

$9.8

2,147

4,623

100%

Average

*As of September 30, 2022

22

Fintech
Fintech deal count stays high

Deal count proportion remains level
with 2021

US fintech VC deal activity

Share of US fintech VC deal count by stage
2,111

80%

Early-stage VC
Angel & seed

60%

1,155

847

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

Deal count

2013

0%
2012

$29.6

20%

2022*

$55.7
2021

$22.0
2020

$14.8
2018

2016

2017

$7.9

$8.6

Deal value ($B)

$17.5

40%

2019

709
$8.0

741

2015

$5.4
2014

$2.4

540

2013

2012

$1.8

367

672

Late-stage VC

1,511

1,208
1,145

100%

*As of September 30, 2022

Deal values on the way down

Average valuation remains above
$400 million

Median and average US fintech VC deal values ($M)

Median and average US fintech VC pre-money valuations ($M)
$35
$30

$472.6
$410.2

$500

$32.2
$24.9

$400

$25
$20

$300

$15

$200

$10

$6.0

$5.9

$100

$5

$40.0

$45.0

Average

Median

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2012

2022*

2021

2020

2019

2018

2017

2016

2014

2013

2012

2015

Median

2013

$0

$0

Average

*As of September 30, 2022

23

Venture debt
Venture debt surpasses $22 billion in value
US venture debt activity

3,691
3,238
2,668

2,730

2,586

3,137

2,857

2,113

1,925

1,705
1,388

$7.5

$8.1

$11.6

$17.3

$15.0

$14.5

$25.6

$33.2

$33.2

$32.7

$22.8

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022*

Deal value ($B)

Deal count

*As of September 30, 2022

Fourth consecutive year above $20 billion

Healthcare debt slows from past years

US tech venture debt activity

US healthcare venture debt activity

795

3,084

2,631
2,544
2,117 2,095

2,190

2,356

1,579
516

1,636
1,314

376

580

637

673

883

766

543
457

386

$3.0

$5.6
2018

2022*

$3.7
2017

$6.1

$2.0
2016

2021

$2.4
2015

$7.0

$2.4
2014

*As of September 30, 2022

2020

$2.1
2013

Deal value ($B)

$5.0

$1.2
2012

Deal count

2019

$20.8
2022*

$19.4
2018

$28.0

$10.8
2017

2021

$12.6
2016

$22.8

$13.8
2015

2020

$8.8
2014

$25.8

$6.4
2013

Deal value ($B)

2019

$6.3
2012

1,028

Deal count

*As of September 30, 2022

25

70% of venture debt going to late stage

Early stage sees shrinking portion of loans

100%

100%

Share of US venture debt deal value by stage

Share of US venture debt deal count by stage

Late-stage VC
Early-stage VC
Angel & seed

*As of September 30, 2022

Median late-stage loan value falls

Range of US early-stage venture debt rounds ($M)

Range of US late-stage venture debt rounds ($M)
$25

$14.0

$20.8

$10.6

$10

$13.0

$13.9

Average

75th percentile

Average

75th percentile

Median

25th percentile

Median

25th percentile

*As of September 30, 2022

$1.1

$1.1

2021

2022*

2020

2019

$0
2018

$0.5

2017

$0.7

$4.0 $3.8

$5

2016

$2.4

2015

$2.1

2014

2020

2019

2018

2017

2016

2015

2014

2013

2012

$0

$15

2012

$2

2022*

$4

$17.0

$10

2021

$6.3

$6

$7.3

$20

2013

$16
$14

$8

2022*

*As of September 30, 2022

Early-stage loans growing larger

$12

2021

2012

2022*

2021

2020

2019

2018

0%

2017

0%
2016

10%

2015

10%
2014

30%
20%

2013

30%
20%

2020

40%

2019

40%

2018

50%

2017

60%

50%

2016

60%

2012

Angel & seed

70%

2015

70%

Early-stage VC

80%

2014

80%

Late-stage VC

90%

2013

90%

*As of September 30, 2022

26

Female founders
YTD capital invested in female-founded
companies exceeds 2020 full-year figures

YTD deal count is on pace to exceed 2020
US VC deal activity in companies with all-female
founder teams

US VC deal activity in companies with at least one
female founder

4,430

1,132

3,092

1,666

2,032

2,235 2,122

2,473

2,730

771

3,092

2,811
481

396

1,282

483

550

742

719

646

441

$3.6
2022*

$8.0

$3.1
2018

2021

$2.2
2017

$3.3

$1.4
2016

*As of September 30, 2022

2020

$1.9
2015

Deal value ($B)

$3.8

$1.7
2014

Deal count

2019

$1.3
2013

$0.8

$32.4
2022*

2012

$57.1
2021

$20.1
2018

$23.4

$15.9
2017

2020

$10.8
2016

$24.7

$12.5
2015

Deal value ($B)

2019

$9.9

$6.9
2013

2014

$5.2
2012

278

Deal count

*As of September 30, 2022

YTD proportion of all-female-led deals
sees small downtick

Amid the economic downturn, femalefounded companies are receiving less capital

US VC deal count

US VC deal value

Female-founded company deal count as proportion of total

Female-founded company deal value as proportion of total
20%

30%

26.4% 25.5%

25%

17.2% 17.2%

18%
16%
14%

20%

12%

15%

10%
8%

0%

0%

2.4% 1.9%

All female founders

At least one female founder

All female founders

*As of September 30, 2022

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2%

2022*

5%

6%
4%

6.8% 6.7%

2021

10%

At least one female founder

*As of September 30, 2022

27

All-female founder teams experience slight
decline in proportion of first financings

YTD proportion of late-stage deal
count increasing

Share of US VC first financings by founder gender

Share of US VC deal count for female-founded companies
by stage

100%

All male
founders

90%

100%

Late-stage VC

90%

Early-stage VC

80%

Mix

80%

All female
founders

Angel & seed

70%

70%

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2012

2022*

2021

2020

2019

2018

2017

0%
2016

0%
2015

10%
2014

10%
2013

30%
20%

2012

30%
20%

2016

50%
40%

2015

50%
40%

2014

60%

2013

60%

*As of September 30, 2022

YTD proportion of deal value in angel &
seed stage sees an increase over prior year

Bay Area leads the US for female-founder
investment
Top five US CSAs by capital raised for companies with allfemale founder teams

Share of US VC deal value for female-founded companies
by stage
100%

Late-stage VC

Combined statistical area

Capital raised ($B)*

90%

Early-stage VC

Bay Area

$5.5

80%

Angel & seed

New York

$4.9

70%

Los Angeles

$1.9

60%

Boston

$1.0

50%

Philadelphia

$0.6

40%

*As of September 30, 2022

30%
20%

New York leads the US in deal count

10%

Top five US CSAs by deal count for companies with all-female
founder teams
2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

0%

*As of September 30, 2022

Combined statistical area

Deal count*

New York

775

Bay Area

590

Los Angeles

377

Boston

159

Washington D.C.

103

*As of September 30, 2022

28

Nontraditional investors
Nontraditional investors continue slowing deployment to VC
US VC deal activity with nontraditional investor participation by quarter

2,500

$80
$70

2,000

$60
$50

1,500

$40
1,000

$30
$20

500

$10
$0

0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Q4

Q1

2018

Q2

Q3

Q4

Q1

Q2

2019
Deal value ($B)

Q3

Q4

Q1

2020
Deal count

Q2

Q3

Q4

Q1

2021

Q2

Q3

2022*

Estimated deal count

*As of September 30, 2022

Nontraditional investors have
outsized impacts on trends within
venture, especially when looking

Deal value participation surpasses $145 billion
US VC deal activity with nontraditional investor participation

6,530

at total deal value. In recent years,
large nontraditional investors—asset
managers, sovereign wealth funds, and
3,779

the top of the market. They participated

began to show the slowdown that the

$108.3

$129.6

$271.6

$145.1

2014

$109.9

2013

$59.1

from nontraditional investors finally

$58.9

2012

market conditions would be easily seen
within venture data. Q3 deal activity

3,216

2,952

$60.2

a pullback from these investors due to

2,347
$26.9

This is a major reason we have said that

1,883
$22.3

investment within the venture market.

3,089

2,822

2015

2016

2017

2018

2019

2020

2021

2022*

Deal value ($B)

Deal count

industry expected. After 1,921 deals were

investor involvement. This data point,
as with many others in this slowdown, is
still higher than any quarter before 2021.
Q4 2020 received the highest amount of
nontraditional investment activity to that
point, a now lowly 1,115 deals.

Estimated deal count

*As of September 30, 2022

completed in Q1, Q3 saw roughly 1,400
completed rounds with nontraditional

4,102

$48.0

in 91.8% of mega-deals in 2021, which
accounted for $195.1 billion in total

5,037

4,239

PE firms—have participated heavily in

Except for corporate venture capital

stood at 58.5% and 43.6%, respectively,

(CVC), deal counts of all nontraditional

in 2021. These declines are heavily

investor types have fallen faster than the

influenced by the lack of large, outsized

broader venture market in 2022. Deal

deals reliant on nontraditional capital.

value participation has fallen even more
precipitously. PE firms have participated

The lack of liquidity for late-stage

in just 48.3% of deal value in 2022 and

companies has strained the strategies

asset managers just 34.9%. Those figures

that they have deployed in the venture

29

Closing in on 2,000 deals led

Crossover participation falling fast

US VC deals led or solely funded by nontraditional investors

US VC deal activity with nontraditional and crossover
investor participation
1,582

2,757

869

Deal count

$62.5
2022*

$67.8
2020

$157.0

$41.9

2018

2017

2016

Deal value ($B)

*As of September 30, 2022

818

711

2019

691

$45.8

$22.7

2015

467

$28.1

$17.6

477

$23.5

377

371

2014

$5.9

266

2013

$80.3
2022*

$4.7

$150.7
2021

2012

$65.8

$66.5
2018

2020

$32.6
2017

$57.1

$27.0
2016

Deal value ($B)

2019

$31.5
2015

$22.3

$12.5
2013

1,409

1,245 1,304

1,850

209

2014

$8.9

952

2012

783

1,156

1,605

2021

1,798
1,761

Deal count

*As of September 30, 2022

market in recent years. Elongated

Corporate investors have helped

averse, at least lessening their appetite

holding periods for the largest private

maintain deal activity for the

for deploying large amounts of capital

investments from hedge funds and

nontraditional investor group. CVC has

into single transactions. Non-cash

mutual funds—because of liquidity

participated in 25.6% of VC deal count

return potential for CVC does provide

regulations and redemption timelines

and 45.1% of deal value YTD; both these

an incentive to continue investment, as

for investors—can cause strategies to

figures are in line with past yearly highs.

creating an ecosystem around current

become overweight to VC. While we

Corporate investors have reaped record

product offerings can boost a company’s

don’t believe many funds are up against

profits in recent years, bolstering their

moat from competitors.

this barrier yet, the strong markdowns in

ability to continue private investments.

public markets have reduced the appetite

However, the fragile economy is likely

for high-value venture deals for now.

to make these investors more risk-

CVCs keep deal participation high

Proportion of US VC deal count by nontraditional investor type
30%

24.6% 25.6%

25%
20%

16.7%

15%

5%

Proportion of US VC deal value by nontraditional investor type
70%
58.5%

60%

47.0%

50%
14.4%

40%

10.5%

30%

11.0% 9.8%

20%

12.6%

10%

Deal value participation falls for all investor types

43.6%
31.3%
8.4%

10%

1.0% 0.9%

0%

48.3%
45.1%
34.9%
25.8%
3.8%

CVC investor
Other tourist investor

PE investor

Asset manager

CVC investor

Government/SWF

Other tourist investor

*As of September 30, 2022

PE investor

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

0%

Asset manager
Government/SWF

*As of September 30, 2022

30

Exits
Exit activity shows little sign of rebounding this year
US VC exit activity by quarter
$300

600

$250

500

$200

400

$150

300

$100

200

$50

100

$0

0
Q1

Q2

Q3

Q4

Q1

Q2

2017

Q3

Q4

Q1

2018

Q2

Q3

Q4

Q1

Q2

2019

Exit value ($B)

Q3

Q4

Q1

Q2

2020

Figma exit value ($B)**

Exit count

Q3

Q4

Q1

2021

Q2

Q3

2022*

Estimated exit count

*As of September 30, 2022
**Announced exit on September 15, 2022

$14.0 billion in exit value was generated
across an estimated 302 exit events in
Q3, with few bright spots to speak of.

YTD exit activity sets expectation of a five-year low
US VC exit activity

1,868

Adobe’s announced acquisition of Figma,
a developer of a web-based design

an extended period of low exit activity
could discourage investors from recycling

2012

2013

2014

Exit value ($B)

capital back into the VC ecosystem.

Exit count

Should the current environment remain,
to fall below $100 billion for the first time
population of unicorns as well, adding
further pressure on the market. The likely
exit path for unicorns has been the public
market, as few corporations are able and
willing to buy such highly valued targets.

2019

2020

2021

2022*

Figma exit value ($B)**
Estimated exit count

*As of September 30, 2022
**Announced exit on September 15, 2022

we expect this year’s total exit deal value
since 2016. There remains a growing

2018

1,092

$85.4

2017

1,227

$781.5

2016

of this year’s total exit value because

1,280

$324.5

2015

1,239

$268.8

1,073

$101.9

is room for concern regarding the pace

1,020

$70.2

exit environment remains lethargic. There

1,113

$77.1

exits, this quarter showed the VC-backed

942

$74.7

Based on the $14.0 billion of completed

894
$128.4

antitrust scrutiny before it is closed.

1,133

$113.0

though it will likely come up against

$132.4

platform, is a positive for the industry,

The overarching narrative of the frozen

in the public eye. The lack of liquidity

IPO market remains, with just five

through public markets could put

companies exiting via traditional IPOs

pressure on startups to return to equity

this quarter. Access to liquidity is critical

markets for additional financings and

to both startups and their investors, and

accept investment at lower valuations

IPOs provide much-needed financing to

compared with prior financing rounds,

startups to continue their growth, albeit

severely diluting current shareholders.

31

Almost 50% of YTD exit value generated
by acquisitions

YTD share of exits via acquisition pushes
above prior year’s record low

100%

100%

Share of US VC exit value by type

Share of US VC exit count by type

Buyout

90%

Buyout

90%

50%

40%

40%

2012

2022*

2021

2020

2019

2018

2017

0%
2016

0%
2015

10%
2014

10%
2013

30%
20%

2012

30%
20%

*As of September 30, 2022

2020

60%

50%

2013

60%

2022*

Acquisition

2021

70%

2019

Acquisition

2018

70%

2017

Public
listing

2016

80%

2015

Public
listing

2014

80%

*As of September 30, 2022

Until recently, special purpose acquisition

listings in Q1 2021. Much of the remaining

returning $1.6 billion to shareholders

companies (SPACs) were an active option

SPACs that have yet to complete

after it evaluated more than 100 targets

to create liquidity for investors. Their

acquisitions are nearing their two-year

and failed to complete an acquisition.

pervasiveness in the market has all but

time limit, at which point shareholders

Although some of the initial acquisition

disappeared as a result of increased

can opt to have their investment returned;

targets may have fallen through, publicly

scrutiny and proposed regulation by the

such is the case with two SPACs launched

listed SPACs represent sidelined capital

SEC. Only three SPACs completed listing

by Chamath Palihapitiya’s firm, Social

that is positioned to support distressed

this quarter, a far cry from the peak of 281

Capital, which announced that it will be

startups during slowdown.

Seed stage sees majority of YTD US
VC acquisitions

Median acquisition exit value remains
above historical figures

Share of US VC round count by round series where next round

Median US VC exit value ($M) by type

is an exit via acquisition
$800

D+
C

$600

B

$300

30%

$200

20%

$100

10%

$0

$66.6
2012

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

0%

$175.0

Acquisition

*As of September 30, 2022

Buyout

$100.0
$65.0

2022*

Angel

$353.6

2021

40%

$400

2020

Seed

2019

50%

$500

2018

A

2017

60%

2016

70%

2015

80%

$722.5

$700

2014

90%

2013

100%

Public listing

*As of September 30, 2022

32

Fundraising
YTD US VC fundraising exceeds prior year’s record high
US VC fundraising activity

1,139

824

768
570

488

644

652

314

337

$23.3

$22.4

$38.2

$43.0

$51.2

$44.8

2012

2013

2014

2015

2016

2017

744
593

Capital raised ($B)

$60.5

$71.9

$88.4

$147.2

$150.9

2018

2019

2020

2021

2022*

Fund count

*As of September 30, 2022

Given public market turbulence and frozen
avenues for liquidity, we expected LPs to
be concerned about their overexposure
to this asset class and the potential for

Billion-dollar funds set record high
Share of US VC fund count by size bucket

$1B+

100%

timely returns negatively impacting

90%

$500M-$1B

fundraising activity. However, US VC

80%

$250M-$500M

fundraising has set a new annual high of

70%

$100M-$250M

60%

$50M-$100M

fundraising narrative has been centered

50%

Under $50M

on the last year’s momentum and the

40%

funds already in discussion prior to the

30%

economic downturn. Entering the second

20%

$150.9 billion, exceeding the 2021 fullyear figure by $147.2 million. Much of the

half of the year, we are starting to see
that momentum atrophy, yet fundraising
remains relatively strong. $29.4 billion was
added to the fundraising total since last

10%
0%
2012

2013

2014

2015

2016

2017

quarter’s report. LPs may feel compelled

2018

2019

2020

2021 2022*

*As of September 30, 2022

to maintain their allocations with GPs to
secure access to future funds and avoid
costly due diligence efforts to identify new

billion, or 86.7% of Q3’s total invested

HC/FT, successfully closed funds with

managers later.

capital, was committed to 66 funds

more than $1 billion in commitments,

led by established managers. What’s

highlighting the fundraising advantage

Further examination of Q3’s fundraising

more, this quarter some of the largest

of GP incumbents. Going forward we

activity shows a large divide in the

players in the space, including Bessemer

expect higher concentrations of capital

success of established managers and

Venture Partners, Battery Ventures,

committed to established managers and

emerging managers. Roughly $22.0

Lightspeed Venture Partners, and Oak

a greater prevalence of larger multistage

33

Investors look to experienced fund
managers to mitigate risk

US VC cumulative dry powder is at an alltime high

Share of US VC raised by emerging or experienced managers
100%
90%
80%

US VC dry powder ($B) by vintage

Experienced firm
fund value ($B)

$300

Emerging firm
fund value ($B)

$250

Total
2022

70%

2021
2020

$200

60%
50%

2019

40%

2018

Overhang
by vintage

$150

2017

$100

30%
20%

2016
2015

$50

10%

2014

Cumulative overhang

0%

*As of September 30, 2022

2022*

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2021

2022*

2020

2019

2018

2017

2015

2016

2014

2013

2012

$0

*As of June 30, 2022

funds increasing the throughput of deals

mega-deals or unicorns. Aiding the VC

into the ecosystem. Much of those returns

through the venture lifecycle.

market’s outlook is the estimated $13.0

are likely derived from holdings in prior

billion in net cash flows to investors

IPOs that only recently cleared their

The surplus of roughly $290.1 billion in dry

through the first half of this year, a high

lockup period or were finally sold by GPs,

powder is a testament to the strength of

amount considering the fast pace of

highlighting the need for exits to remain

this asset class and its continued growth.

contributions during the period. LPs are

strong to further boost the VC market.

It should be noted that the majority of

continuing to generate strong returns

Moreover, those cash flows bolster the

dry powder will target more-traditional

from prior investments, supporting the

attractiveness of established managers

stages of venture, with less invested in

prospect of that capital being recycled

and will reinvigorate investor participation.

Lethargic first-time fundraising activity
presumed to fall below 2014 levels

Micro-fund closings slow from 2021
US VC micro-fundraising activity

US VC first-time fundraising activity

498

307

221

330

Capital raised ($B)

Fund count

Micro-fund value ($B)

*As of September 30, 2022

$5.0

$4.5

$6.8

$3.3

2019

2020

2021

2022*

2021 2022*

$4.9

$18.3

2020

2018

$8.6

2019

$4.1

$13.7

2018

2017

$12.5

2017

281

287

$3.1

$10.1

2016

$2.9

$6.9

2015

2014

$4.3

2014

$2.3

$5.4

2013

$9.2

$3.0

2012

338

167

2013

149

100

$1.9

108

323

303

287

2016

236

$3.3

213

$2.4

110

202

211

2012

180

259

2015

246

Micro-fund count

*As of September 30, 2022

34

Methodology
Deals
We include equity investments into startup companies from an outside source. Investment does not necessarily have to be taken from an
institutional investor. This can include investment from individual angel investors, angel groups, seed funds, VC firms, corporate venture firms,
corporate investors, and institutions, among others. Investments received as part of an accelerator program are not included; however, if the
accelerator continues to invest in follow-on rounds, those further financings are included. All financings are of companies headquartered
in the US, with any reference to “ecosystem” defined as the combined statistical area (CSA). We include deals that include partial debt
and equity.
Angel & seed: We define financings as angel rounds if there are no PE or VC firms involved in the company to date and we cannot determine
if any PE or VC firms are participating. In addition, if there is a press release that states the round is an angel round, it is classified as such.
Finally, if a news story or press release only mentions individuals making investments in a financing, it is also classified as angel. As for seed,
when the investors and/or press release state that a round is a seed financing, or it is for less than $500,000 and is the first round as reported
by a government filing, it is classified as such. If angels are the only investors, then a round is only marked as seed if it is explicitly stated.
Early stage: Rounds are generally classified as Series A or B (which we typically aggregate together as early stage) either by the series of stock
issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing history,
company status, participating investors, and more.
Late stage: Rounds are generally classified as Series C or D or later (which we typically aggregate together as late stage) either by the series
of stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing
history, company status, participating investors, and more.
Nontraditional investors: “CVC” includes rounds executed by established CVC arms as well as direct equity investments by corporations into
VC-backed companies. “PE” includes VC deals by investors whose primary classification is PE/buyout, growth, mezzanine, or other private
equity. “Crossover” investors are a subset of nontraditional investors—specifically asset managers, hedge funds, mutual funds, and sovereign
wealth funds—that have been active in VC investment across any stage. They are referred to as crossover because these investors are likely to
be participating at the late stages directly prior to an exit.
Venture debt: The venture debt dataset is inclusive of all types of debt products raised by VC-backed companies, regardless of the stage
of company. In mixed equity and debt transactions, equity is excluded when the amount is of known value. Financings that are solely debt
are included in this dataset, though not incorporated into the deal activity dataset used throughout the report. Mixed equity and debt
transactions will be included in both datasets.

Exits
We include the first majority liquidity event for holders of equity securities of venture-backed companies. This includes events where there
is a public market for the shares (IPO) or the acquisition of majority of the equity by another entity (corporate or financial acquisition). This
does not include secondary sales, further sales after the initial liquidity event, or bankruptcies. M&A value is based on reported or disclosed
figures, with no estimation used to assess the value of transactions for which the actual deal size is unknown. IPO value is based on the premoney valuation of the company at its IPO price. One slight methodology update is the categorical change from “IPO” to “public listings” to
accommodate the different ways we track VC-backed companies’ transitions to the public markets. To give readers a fuller picture of the
companies that go public, this updated grouping includes IPOs, direct listings, and reverse mergers via SPACs.

Fundraising
We define VC funds as pools of capital raised for the purpose of investing in the equity of startup companies. In addition to funds raised by
traditional VC firms, PitchBook also includes funds raised by any institution with the primary intent stated above. Funds identifying as growthstage vehicles are classified as PE funds and are not included in this report. A fund’s location is determined by the country in which the fund’s
investment team is based; if that information is not explicitly known, the HQ country of the fund’s general partner is used. Only funds based
in the United States that have held their final close are included in the fundraising numbers. The entirety of a fund’s committed capital is
attributed to the year of the final close of the fund. Interim close amounts are not recorded in the year of the interim close.

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