'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 •
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.'"
