In Q1 2023, global venture capital hit its lowest levels in three years. $88B was raised by startups globally in the first three months of 2023, down from a peak of $216B in Q4 2021.
In 2022, the impact of venture capital pullback was tempered by a gradual slowing, and deals that had already been months in the making, but it is now clear we have firmly returned to pre-pandemic levels of venture capital investment. The late-stage investment landscape in particular has changed drastically from the bonanza of 2020/21.
In 2022, global venture capital investment for the full year dropped by 32% to $483 billion compared to 2021. Out of the three regions, EMEA showed the most resilience experiencing the smallest drop in VC investment in percentage terms compared to the Americas and Asia & Oceania. However, despite this drop, the Americas still leads by total VC investment.
It’s worth noting, however, that when measured by historical standards, 2022 levels of investment were still higher than any previous year on record except for 2021.
The drop was most significant in Asia & Oceania, at -40% (driven mainly by China). The decline in EMEA was less severe, with 21%, and as a result, almost caught up.
The Americas declined by 36% and remains the top region globally for inward VC investment.
To understand the underlying dynamics on a global scale, the below section shows investment by country. Africa and a few places in Europe were the only ones experiencing growth relative to the previous year.
Notable growth regions include many parts of Africa, Saudi Arabia, Romania, Portugal, Kenya, Thailand, Malaysia, and Italy.
This table shows data from Dealroom for venture capital investment by destination in billions of dollars for different countries and continents. The below table includes the percentage change in the last 12 months, 24 months, and five years, as well as the investment amount between 2010 and 2022.
By default, the table is sorted by 2022 investment and shows the top 5 countries: the US, China, the UK, and India. Double-clicking on "last 12 months" growth shows the fastest-growing countries.
The top three countries globally for venture capital investment in 2022 are the United States, China, and the United Kingdom. The US is way out in front with over $234 billion invested, while China and the UK have around $488 billion and $299 billion invested, respectively.
When we look at the continents, it seems like Europe and Asia are the top performers. Europe has the UK, France, Germany, and Israel in the top 10, while Asia has China, India, Singapore, and South Korea. North America also has a strong showing, with the US and Canada in the top 10.
It's also worth noting that most countries show a decrease in investment from the previous year. The top 3 countries, the US, China and UK, have decreased by -35%, -40% and -27%, respectively.
The decline is mainly driven by a dramatic drop in late-stage investing, while early-stage investing continues to be highly active.
Below we break venture capital into three distinct stages. Startup stage ($0-15M rounds), breakout stage ($15-100M rounds), and scaleup ($100M+ rounds). This provides more consistent and timeless segmentation of the startup & venture capital landscape (more so than self-reported round labelling, which are applied inconsistently, especially between business cycles).
Both quarterly and annual data shows that the downturn in venture capital is not nearly as pronounced in the startup stage.
By destination and stage
Later stage rounds are more skewed towards the Americas and Asia & Oceania, while EMEA is more skewed towards Seed and series A rounds. EMEA has a bigger early-stage (Seed + Series A) ecosystem than Asia & Oceania and is not that much smaller than the Americas.
SaaS continues to grow in overall share and now accounts for 45% of total investment.
Physical tech includes anything where the startup produces molecules rather than bits.
Marketplaces and eCommerce startups are defined by Dealroom as places connecting a buyer(s) and seller(s) where goods or services are bought, sold or exchanged.
Fast-growing industries include Energy, Jobs & Recruitment, and Fintech. Here we measure 2020 to 2022.
As shown above, investment in early-stage startups is still on the rise. We consider early-stage to be $0-15M rounds.
Especially investment in early-stage SaaS companies continued its meteoric rise in 2022.
That said, even early-stage SaaS investing incurred a slowdown in Q3 and Q4 of 2022.
The below table shows VC investment by industry in early stages. In early-stage investing, fast-growing industries include Gaming, Semiconductors and Wellness.
The unique number of venture capital investors has expanded massively. To explore the most active and successful investors, visit the platform.
The top three types of investors in 2022 are angel investors, corporate investors, and venture capital firms in terms of total investment.
In 2021 and 2022, there was a noticeable spike in the number of angel and corporate investors participating in rounds. Angel investors in particular saw a big jump, with the number almost doubling from the previous year.
Corporate investors also saw a significant increase. Venture capital firms, on the other hand, saw a small decline. It seems like the trend for these two years is more participation from angel and corporate investors, while the participation of venture capital firms is slightly on the decline.
Venture capital firms are sitting on record dry powder.
- Report: The State of European Startups & VC in 2022
- Report: The State of VC in 2022