Welcome to Q4, friends. If you expected to start the final part of 2022 with good news, difficult. Instead, we are starting the quarter with rough data.
Sure, we’re waiting for data dumps from CB Insights, PitchBook and Crunchbase on Q3 venture capital aggregates, but one particular benchmark indicator we track here at The Exchange shows intermittent weakness as we watch an eventful run and holidays. until the end of the calendar year.
Today we are going to take a look at unicorn fodder. Unicorns eat capital and excrete value, at least in theory, a relationship that was in full swing last year. Huge nine-figure venture capital rounds were fueled by cross-investors and others who amassed in startup territory, driving the valuation of many startups to stratospheric levels. Some of those bets will pay off, like last June’s Figma Series E. Many will not.
What matters for our purposes, though, is that the rate at which unicorns are raising capital is slowing down not only from last year’s epic fundraising period, but even compared to the more distant past. If unicorns can’t raise as much this year as they did in, say, 2019, how many billion-dollar-plus startups are going to survive?
Not that we’re going to predict a unicorn slaughter this early in the week, but the data is worrying.
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Today, we will consider data from Crunchbase to understand where investor sentiment rests today, and then discuss what could break the logjam.