Ten Charts That Explain the 2022 Pullback
Data shows sliding secondary share prices and disappearing late stage funding rounds
Will 2023 represent a return to normal with the mania of 2021 looking like the real outlier — or will the venture market continue to erode this year?
Chart week continues here at Newcomer. Earlier this week I published AngelList and Silicon Valley Bank’s look at crumbling early-stage valuations in the second half of 2022.
Now, we’ve got ten charts that give a snapshot of what exactly happened in 2022. In what I hope will be a recurring monthly feature, we pulled together data from PitchBook, EquityZen, Crunchbase, Carta, Cooley, Layoffs.fyi, and AngelList/Silicon Valley Bank to give you a snapshot of what’s happening in the venture market.
Funding rounds with $100 million-plus check sizes are evaporating, deal volume is shrinking, and startup shares on the secondary markets are falling.
1. Startup share prices are falling on the secondary market.
Since companies can be reluctant to raise funding rounds that give them a lower valuation, the secondary markets can sometimes be a better source of truth on startup valuations. Shareholders in private startups are selling at steeper and steeper discounts, according to data provided by EquityZen.
In January 2023, the average discount reached 38%, falling from a 4% premium in March 2022.
2. Say goodbye to $100M+ funding rounds. They’ve been disappearing.
In what’s clearly looking like peak insanity in retrospect, there were 149 funding rounds in which startups raised $100 million or more in the fourth quarter of 2021.
The capital bazooka slowed its firing in 2022. And by the fourth quarter fewer companies were raising $100 million+ venture rounds than during those first few scary quarters of the pandemic.
3. Like the $100M round, valuations of $100M dwindle.
For points in 2021, the majority of venture deals funded a company with a pre-money valuation in the nine digits. That’s a thing of the past with just 19% of raises meeting that same threshold today, down from a peak of 55% in September 2021.