Tag Archives: PE

VC Funding Down 67% in December

Tough times in startupland show no signs of ending. Venture funding fell 67% in December from a year earlier, according to a new report by S&P Global:

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The aggregate value of venture capital-backed funding rounds worldwide dropped 66.7% year over year in December 2022 to $19.71 billion, which is around the same level of annual decline seen in November 2022, according to S&P Global Market Intelligence data.

The number of completed rounds fell by 57%.

These grim stats match what I’m seeing in the market every day. Far fewer deals are getting done, and those that are take longer to close.

The weakest companies have left the market.

The $100 million “seed” rounds in crypto startups with no product or customers were everywhere in 2021. Now, those companies have either given up on fundraising or gone out of business.

The good news is that good companies are still getting funded. I’ve been a part of several multimillion dollar seed rounds in recent months.

These companies have annual revenues in the hundreds of thousands, growing fast. They also have a head start in huge markets.

Even for these companies, rounds take months to close and sometimes don’t fill completely.

If your startup doesn’t have rapidly growing revenue, your chances of raising today are slim. Instead, I’d focus on getting more customers first, which will make your fundraise much easier.

If you are fundraising, you want to raise enough to give yourself runway for two years at least. The 18 month standard I used in 2021 just isn’t enough in this bleak environment.

And don’t count on all that “dry powder” saving you. VC funds may be sitting on a lot of cash, but they’re also deploying more slowly.

As for me, I’m investing in about one company a month, same as I always have.

A few great companies are born every year. In venture, our only job is to own a piece of them.

What do you see in markets today? Leave a comment at the bottom and let me know!

More on tech:

They Passed on Apple, Google and Facebook…Here’s Why

How Startups Change Lives

Entrepreneurial ADD: The Startup Killer

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Photo: “The-Movement LosAngeles Graffiti Art” by anarchosyn is licensed under CC BY-SA 2.0.