- The use of new technologies, methods and financial instruments have made venture capital more complex and competitive for both investors and entrepreneurs.
- The US startups at early stages are performing well under these condition and Limited Partners (LPs) are somewhat willing to offer larger funds. The US IPO market faced a stoppage in Q2, and the number of listings per quarter based on VC funding reached all time low in last thirteen years.
- The US VC deal volume as well as the deal counts are continuously declining in both quarters of 2022 in all stages of startup cycle.
- The US VC activity breakdown per industry sector specifies that the Biotech/ Pharma and enterprise tech startup deal volumes in first half of 2022 is even higher than the deal volumes during the first half of 2019 and late-stage investments activities in these two sectors are growing.
- The US exist activities are lowest due to the quick closure of the IPO market, only 22 in first half which is 8.3, 4.9 time less than 2021 and 2020, respectively. As a consequence mergers and acquisitions activities increased and other exit options have seen a sharp decline due to low valuations
- Blockchain and crypto startups are still underrated among the VC investors due to the lack of transparency in this market. Only 5% of US VC investments went to this sector which shows the skepticism of investors towards this market. The recent drop in crypto sell off is also an addition to investors’ hesitation and do not want to return to these type investments any soon.
- In Europe, venture capital, despite uncertainty after the Russia-Ukraine war, inflation, and disrupted supply chains, took off strongly in 2022. The overall deal value after first quarter was € 27.5 billion, at current growth rate the total deal value for 2022 could be slightly higher than €105.8 billion in 2021.
- The European VC is becoming more mature, with a focus on venture strategy in upcoming years and a convergence between venture capital, private equity and M&A activities is evident.
- The percentage of new lead investors on board is also decreasing compared to last year which indicates the insecurity among the investors to take lead positions in overfunded startups in last few years.
