The State of U.S. Early-Stage Venture & Startups: 2022
Venture performance declined slowly, and then suddenly in 2022.
Jan 17, 2023 — 2 min read
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- 2Q22 represents the largest single-quarter decline in venture capital performance (deal volume and tenor) ever observed in our dataset.
- Activity rate fell by 2.3% and markup rate fell by 5.5% over the previous quarter.
- Median valuations increased at Series A and held steady at pre-seed and seed.
- The share of later-stage deals on AngelList decreased in 2Q22, while the share of seed-stage deals increased.
- Despite the broader crypto market decline, Web3 startups on AngelList continued to capture the largest share of deals and capital deployed in 2Q22.
- Startup spend continued to increase in 2Q22, but payroll spend growth slowed.
- Read all our findings in our 2Q22 State of U.S. Early-Stage Venture & Startups report.
2022 began with fears of a downturn in the early-stage market after the historic highs of 2021, and ended with those fears fully realized. Activity rate (the share of startups that raised a round or exited) and positive activity (the share of startups that raised a round or exited at a valuation increase) fell by 5 percentage points in 2022 over the previous year—but that stat obscures the severity of the decline in the latter half of 2022.
4Q22 ended with a positive activity rate of 67%, a 17 percentage point decline from the start of the year. 4Q22’s activity rate of 7.4% was a 4.2 percentage point decline from 1Q22. In short, fewer startups went out to raise in the latter half of 2022, and of those that did, a significantly smaller percentage raised at a markup.
These increasingly less favorable market conditions for startups may be good news for investors. While median and average valuations increased YoY, they showed marked declines in 4Q22, indicating the market is becoming more buyer-friendly.
The 2022 State of U.S. Early-Stage Venture & Startups report is written in collaboration with data partner Silicon Valley Bank. Our combined datasets offer detailed insight into how capital flowed into and out of early-stage startups in 2022.
Additional key findings from this quarter’s report include:
- Most popular early-stage markets
- Funding to female founders
- Investment volume by instrument
- Investment volume by round
- Startup spending activity
- Startup payroll spend
- Median startup revenues
- Startup spend by vendor
- Growth in VC dry powder
- VC predictions for 2023
Disclaimer
All data referenced in this material is current as of 1/1/23, unless otherwise mentioned. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision and does not constitute an offer of any kind. Past performance is not indicative of future results. The content speaks only as of the date indicated. We undertake no obligations to update them in the future. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.
