Bad News: Global VC Funding In April Dipped Again. Good News: It Wasn’t A Nosedive

Global venture funding totaled $47 billion in April 2022—the lowest amount invested in private companies in the past 12 months—based on an analysis of Crunchbase data. While the dip isn’t massive, it does signal that the slowdown we saw in the first quarter of this year is the start of a longer-term shift in funding, particularly at late stage.

All in all, April funding fell 10 percent month over month from $52 billion in March and down 12 percent from $53.5 billion in April 2021.

Generally, a 10 to 12 percent dip in funding dollars is not a huge drop, especially considering that April’s total still far exceeds funding in any given month in 2020 by between $5 billion and $29 billion.

But, funding in the past few months does indicate that the environment is shifting away from the record setting peaks of 2021, when global funding doubled compared to 2020.

The opening up of the public markets in 2021, the unprecedented number of new technology listings and the increased valuations drove investors to value private companies at increasingly lofty prices. That funding climate has cooled off, but not disappeared.

Looking at funding by stage, some more nuanced trends emerge:

• Seed stage companies raised $3 billion in April 2022. Seed fell funding month over month, but still grew year over year by 14 percent;
• Early stage funding was the lowest it’s been in 12 months, at $14.3 billion. This stage of funding fell month over month, and was flat year over year compared to April 2021;
• Late stage funding, which tends to fluctuate more than any other stage, was flat month over month, but down by 19 percent year over year.

One trend that’s clear from Crunchbase data: the largest decline by stage, year over year, is taking place at late stage funding.

YoY monthly decline

Also notable: For the first time in more than a year, March and April 2022 funding showed a decline for those months year over year. By contrast monthly growth rates in 2021 compared to 2020 ranged from 39 percent on the lower end to 180 percent on the higher end.

new unicorns

Another sign of the contraction in later stage funding this year: New unicorn counts also fell year over year, with 34 new unicorns minted last month. That’s down from 51 created in April 2021.

Industries that raised more in 2022

There are some industries that continue to draw robust venture investor interest. Those that have raised proportionally more dollars in 2022 to date compared to 2021 include blockchain, supply chain management, renewable energy, marketing tech, and gaming.

Inflated valuations

Venture and growth equity investments into private companies doubled in 2021, raising concerns about inflated valuations and a bubble market. In that frenzied dealmaking environment, some investors started to raise concerns about due diligence (or lack thereof), as fundings closed faster and faster. Many companies last year raised at significantly higher valuations, sometimes within months of their prior rounds.

This competitive investment market already shifted down to gear in the first quarter of 2022, and that trend continued into April. We expect later stage startups will need to become more focused on revenue before growth, as they might not be able to raise funding as easily as they did in 2021.

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Methodology

Funding rounds included in this report are seed, angel, venture, corporate-venture and private-equity rounds in venture-backed companies. This reflects data in Crunchbase as of May 3, 2022.

Please note that all funding values ​​are given in US dollars unless otherwise noted. Crunchbase converts foreign currencies to US dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Illustration: Dom Guzmán