Q3 2022 Venture Financing Report – Downward Trends Continue in Deal Count, Invested Capital and Pre-Money Valuations // Cooley // Global Law Firm

Cooley handled 298 disclosable venture capital financings for Q3 2022, representing $8.1 billion of invested capital, continuing a downward trend for both metrics and representing the lowest for both since Q4 2019. In Q2 2022, we reported 332 disclosable VC financings with invested capital of $16.6 billion, and in Q1 2022, we reported 401 disclosable VC financings with invested capital of $24.3 billion.

We have witnessed the downward trend in amounts raised during 2022 across all stages of financing, but it is most pronounced in later-stage deals (Series C and later). For example, Series D and later deals have seen a 78% drop in amount raised during 2022, dropping from $10.5 billion in Q4 2021 to just $2.3 billion in Q3 2022. The amount raised in Series C deals dropped more than 64%, from $3 billion in Q4 2021 to $1.1 billion in Q3 2022. The drop from Q4 2021 to Q3 2022 was nearly 61% for Series B deals (from $5.3 billion to $2.1 billion), 50% for Series A deals (from $3.5 billion to $1.8 billion) and only 9% for seed deals (from $932 million to $849 million). These declines in amounts raised are consistent with trends seen in the broader market. The more significant drops in later-stage deals compared to early-stage deals is expected, given longer time horizons to exits in early-stage deals, leading to more stability for investors.

Median pre-money valuations also declined during Q3 2022 at all levels of financing, with the largest decrease occurring in later-stage deals. The median pre-money valuation for Series D or later deals dropped from a record high of $3.5 billion in May 2022 to just $527 million in September 2022, the lowest median pre-money valuation seen for Series D or later deals since May 2020. For Series C deals, median pre-money valuations dropped from $502 million in June 2022 to $130 million in September 2022, the lowest since August 2020. The median pre-money valuation for Series B deals dropped from $164 million in June 2022 to $90 million in…

Read complete post here:
Source link