VCs Step Back: Global Funding In August Hits Lowest Point In 2 Years

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VCs Step Back: Global Funding In August Hits Lowest Point In 2 Years





Global venture funding reached $25.2 billion in August 2022, the lowest monthly funding amount recorded in the two years since August 2020, according to a Crunchbase News analysis.

This past month is down 52% year over year and down around 10% month over month.

Fewer startups are raising funding at every stage. And with that comes a slowdown in hiring, more layoffs and companies shutting down.

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Companies with layoffs announced this past month include Snap which laid off 20% of its workforce—around 1,300 employees. And Robinhood laid off 23% of its workforce with about 800 team members losing their jobs. Shutdowns include two companies in real estate: home sale management company Reali, and community space for women The Wing.

And for companies that need to raise funding, extension rounds are on the rise as companies look to raise bridge financings to extend their runway.

Late-stage fundings saw the biggest drop of around 65% for the most recent month year over year. Early-stage financings are down by around 35%, and seed by 19% for the same timeframe.

A through C

When we dive into funding by each subsequent stage for Series A through C in 2022, the trends differ by stage.

We found that Series A rounds were the least affected by the funding slide; funding remained flat in August 2022 compared to August 2021. Series B rounds, on the other hand, fell by 55% in the same timeframe, and Series C funding dropped even further by 77%.

This year started out quite well for Series B and C rounds, with more funding raised compared to 2021 in the earlier months. But then from March onward, Series C fundings trended well below 2021 amounts, and Series B fundings followed suit and were down more dramatically in July and August 2022.

In the meantime, emerging public cloud software companies also have been hit hard. The Bessemer Cloud Index is down 55% from a year ago, and funding for those companies in August 2022 is down by a similar percentage from August 2021.

And those large private valuations we’re used to seeing have slowed, as August saw the lowest new unicorn count in two years.

The pullback we were all waiting for is finally here. Will global monthly funding this fall reach as low as February 2020 at $18.3 billion, the lowest funding month on record since the beginning of 2019? We can only wait.

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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 Sept. 6, 2022.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. 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 Guzman


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Go to Publisher: Startups Archives – Crunchbase News
Author: Gené Teare