Global VC investment and the number of VC deals declined in Q2’22 amid ongoing geopolitical uncertainties, supply chain issues, and increasing inflation and interest rates. VC investment in the US showed the most resilience, led by a $2 billion raise by Epic Games, a $1.7 billion raise by SpaceX and a $1.5 billion raise by GoPuff. In Europe, VC investment dropped across most individual jurisdictions. Fintech, cybersecurity, and supply chain management continued to attract significant investment from investors, in addition to alternative energy and energy storage.
IPO activity stalled across the board during Q2’22, driven by declining valuations and the poor performance of tech companies on the public markets. With valuations dropping, cash preservation is rapidly becoming a priority for companies. While there continues to be dry powder in the market, VC investors are becoming more conservative, focusing more on profitability when making investment decisions.
With no end in sight to the global uncertainty, the IPO window is expected to remain firmly shuttered and VC investment is expected to remain soft in Q3’22. The VC market is likely to see down rounds as companies feel pressure despite the challenging market conditions. M&A activity could see a bump as investors look for deals and companies in different industries consolidate in order to improve their market positions.
In this quarter’s edition of Venture Pulse, we look at these and a number of other global and regional trends, including:
- Declining investor interest in consumer-focused businesses, particularly in the Americas
- Increasing focus of investors on profitability and cash conservation
- Growing geographic diversification of deals in Europe and Asia
- Declining levels of CVC investment in many jurisdictions
- Increasing interest in alternative energy and battery storage