Deniz Kılınç / Istanbul, October 26 (HNA) – The number of global VC deals plummets to 7,817 in Q3’22—the lowest level since Q4’17 and global investment declines for the third consecutive quarter, according to recent research by KPMG.
“Deal numbers across the Americas, Europe and Asia drop, with Americas attracting more than half of global VC total, 45.5 billion dollars, during the quarter” read the KPMG research report, adding that, “Signs point to Q4 VC funding being lower than hoped as geopolitical turmoil remains while increased due diligence and investor caution cause delays to deals closing.”
Significant market volatility, ongoing geopolitical and economic turmoil – including fears of a recession – have led to a continued and significant cooling of global VC funding, said Jonathan Lavender, Partner at Global Head of KPMG Private Enterprise and Head of Markets KPMG International, and added:
“Despite five deals closing with values over $1 billion, the VC environment has seen the overall number of deals drop to its lowest levels since 2017 and the value of those deals slump to mid-2020 levels; the peak of the pandemic and lockdowns.”
Amid a growing energy crisis, economic turbulence continued pandemic impacts and increased pressures on businesses, funds continue to flow into clean energy, fintech, biotech, cyber and B2B, including AI and machine learning start-ups and scale-ups, stated in the report and added:
“Global VC investment is likely to continue to fall throughout the final quarter of 2022 as Q3 sees the third consecutive drop in deals and funding value whilst signs indicate increased conservativism amongst investors amid rising fears of a global recession.
“According to the Q3’22 edition of Venture Pulse — a quarterly report, published by KPMG Private Enterprise, that analyzes key VC deals and trends globally, global VC funding fell to a nine-quarter low of $87 billion in Q3’22; levels not seen since 2020 in the Americas, Europe, and Asia. The decline in the number of deals was even more marked during the quarter, with just 7,817 VC deals globally—the lowest volume since Q4’17.”
“It’s not doom and gloom for all start-ups and scale-ups however, increased conservatism and caution from investors and an overall tighter landscape may push many to consider alternative financing sources,” said Conor Moore, National Venture Capital (VC) Co-Leader
KPMG in the US and added:
“Late-stage companies have recognized that funding priorities have shifted dramatically and that if they want to attract the investment they will need to focus on their profitability story.”
During Q3’22, all major regions attracted at least one $1billion+ megadeal. As well as US-based SpaceX raising $1.9 billion, Germany-based Celonis raised $1.4 billion, China-based Sunwoda EVB raised $1.2 billion, Sweden-based Northvolt raised $1.1 billion, and US-based TerraWatt Infrastructure raised $1 billion.
Key Highlights – Q3’22
– Global VC investment fell for the third straight quarter, from $136.8 billion in Q2’22 to $87 billion in Q3’22.
– The number of global VC deals dropped from 10,425 in Q2’22 to 7,817 in Q3’22—the lowest level in almost five years.
– The US accounted for $43 billion in VC investment in Q3’22, near half of the global total.
VC investment across the Americas declined from $76.6 billion to $45.6 billion quarter-over-quarter.
– VC investment in Asia dropped from $26.6 billion in Q2’22 to $21.7 billion in Q3’22.
Europe experienced a sharp drop in VC investment between Q2’22 and Q3’22, from $31 billion to $18.7 billion.
– Global corporate-affiliated VC investment fell from $59 billion across 2,459 deals in Q2’22 to $40.5 billion across 1,810 deals in Q3’22.
– VC-backed exit value increased from $86.6 billion in Q2’22 to $101.1 billion in Q3’22, driven by a large increase in exit value in Asia—from $51.6 billion in Q2’22 to $82 billion in Q3’22. Exit value in the US remained incredibly weak, with $14 billion in exits – the lowest level since Q4’16.