📺 Stream EntrepreneurTV for Free 📺

'That's Not What I Want to Invest In': Venture Capitalists Withheld Billions From Startups Last Year — and Neglected One Urgent Category In Particular U.S. investors financed just over 3,000 startup funding deals last quarter, a significant drop over the year prior.

By Amanda Breen Edited by Jessica Thomas

entrepreneur daily
PeopleImages | Getty Images

Venture capital can be critical for a company's growth across many different stages — but the funds aren't flowing as freely as they once did.

U.S. investors backed 3,011 startup funding deals last quarter, about a third fewer than they did during the same quarter last year, and gave $39.8 billion in cash — almost half as much compared to the same period last year, according to Pitchbook data reported by Bloomberg.

Related: 3 Alternatives to Venture Capital Funding for Startups | Entrepreneur

Angel and seed deals, funding for startups in their very early days, were hit especially hard, seeing half as many funding deals as there were the year before. But Pitchbook analyst Kyle Stanford attributes that in part to excess financing amid the pandemic, where "probably too many" startups raised money.

Worldwide, startup funding dipped nearly 60% — down from $152.9 billion to $87.4 billion year over year, per the data. Some of that dip can be attributed to higher interest rates, Reuters reported.

Even as public tech companies have started to recover, those in the private sector continue to struggle amid few significant initial public offerings and large acquisitions, per Bloomberg. The value of those types of deals fell to just $5.5 billion in the U.S., according to the data.

Related: 5 Ways Shunning Venture Capital Made Me a Better Leader

According to Stanford, the economic climate is causing investors to pull back on previously aggressive growth strategies. "Investors are looking at that saying, 'That's not what I want to invest in,'" he said, per Bloomberg. "They're saying, 'I want to invest in a company that has some semblance of a path to profitability.'"

Amanda Breen

Entrepreneur Staff

Senior Features Writer

Amanda Breen is a senior features writer at Entrepreneur.com. She is a graduate of Barnard College and received an MFA in writing at Columbia University, where she was a news fellow for the School of the Arts.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

These Coworkers-Turned-Friends Started a Side Hustle on Amazon — Now It's a 'Full Hustle' Earning Over $20 Million a Year: 'Jump in With Both Feet'

Achal Patel and Russell Gong met at a large consulting firm and "bonded over a shared vision to create a mission-led company."

Business News

These Are the 10 Most Profitable Cities for Airbnb Hosts, According to a New Report

Here's where Airbnb property owners and hosts are making the most money.

Side Hustle

How to Turn Your Hobby Into a Successful Business

A hobby, interest or charity project can turn into a money-making business if you know the right steps to take.


Want to Be More Productive? Here's How Google Executives Structure Their Schedules

These five tactics from inside Google will help you focus and protect your time.

Starting a Business

This Couple Turned Their Startup Into a $150 Million Food Delivery Company. Here's What They Did Early On to Make It Happen.

Selling only online to your customers has many perks. But the founders of Little Spoon want you to know four things if you want to see accelerated growth.