I can’t stop, I won’t stop.
That’s what the first data on the global venture capital market in the first quarter of 2022 seems to say. New data published by Crunchbase Newsone this morning paints a picture of a market slowing down, but hardly stopping.
In comparative terms, the data set shows that the global risk market in the first quarter of 2022 was, in fact, larger in dollar terms than its comparison a year ago. However, compared to the fourth quarter of 2021, it marked a decline, the first in a few quarters of record company totals.
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Exchange, and TechCrunch+ in general, will be exploring the global venture capital market from various perspectives in the coming days. Data from the usual suspects (Crunchbase, PitchBook, CB Insights, risk associations, and start-up service banks) will round out the current partial picture of the state of the world.
A drop in venture capital investment in the first quarter is not a surprise, even if the drop is modest and only exists on a quarterly basis. A drop in the value of tech stocks from the closing months of 2021 helped sour the mood among private and public investors about the value of tech companies. What was once the world’s hottest sector cooled off a bit, prompting an anticipated reduction in risk activity.
The stakes are high, mind. If the venture market slows further in the second quarter, the number of startups that could seek capital in a market that doesn’t agree with their previous valuations could skyrocket. And if that happens, the exuberance of 2021 could become the hangover of 2022.
Let’s explore the data related to early and late stage activity and what remains of the outgoing market. Then, we’ll explore how the data matches, or doesn’t match, our expectations for Q1 interviews and news events.
Our old enemy, the venture capital data lag, could weigh on the results. So, at the end of our paper today, we’ll ask ourselves if we expect the second quarter to be even more conservative than the picture we’re beginning to paint of first quarter venture capital activity.
Where the company is slowing down the fastest
Normally, when we compare venture capital results, we would pay more attention to year-over-year results than those stated in sequential quarters. But in the wake of the 2021 venture capital party, it’s actually more reasonable to compare periods in time order. Why? Because things have changed so much in the past year for the venture capital and startup worlds that comparing to last year’s results is a bit more apples:oranges than looking at successive quarters.
But we will continue to do both, for the sake of completeness. According to Crunchbase News, this is what the data looks like: