State of Venture Q3 2022 Report

The global venture ecosystem continues its slowdown in Q3’22 as funding decreases 34% quarter-over-quarter.

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Global venture funding reached $74.5B in Q3’22, hitting a 9-quarter low. The new funding level represented a 34% drop quarter-over-quarter — the largest quarterly percentage drop in a decade — and a 58% decline from the investment highs reached in Q4’21.

Deal activity hit 7,936 deals total, marking a 9.5% quarterly drop and a 7-quarter low.

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US-based companies raised $36.7B, accounting for just under half of global Q3’22 funding. Some of the quarter’s largest rounds in the region went to companies including TeraWatt Infrastructure, TerraPower, and EnergyX.

Other Q3’22 highlights across the venture ecosystem include:

Q3’22 saw only 25 new unicorns (private companies valued at $1B+) — the lowest unicorn birth count since Q1’20. The US accounted for the majority (14) of these births. Leading entrants include Zhiji Auto ($4.4B valuation), Tridge ($2.7B), and 21.co ($2B).
100M+ mega-rounds collectively accounted for $29.6B in Q3’22, marking a 9-quarter low and a 44% drop QoQ. Mega-round deal count dropped in all major regions to hit 144 in Q3’22, also a 9-quarter low.
Retail tech funding declined 33% QoQ to $8.5B, even as deals ticked up 5% to 776. Average deal size YTD clocked in at $24M, down 35% compared to 2021 averages.
The fintech sector also continued to contract. With $12.9B raised across 1,160 deals, Q3’22 was the weakest quarter the sector has seen since Q4’20.
Global digital health deals fell to their lowest levels in 5 years, with $5B raised across just 419 deals. The US led, accounting for more than half (58%) of total digital health funding at $2.9B.

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State of Venture Q3 2022 Report

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22/06/202222/06/2022

Understanding Current Macro and Cryptomarkets 📉

Global Marcroeconomics

Let’s start with the big picture.

There has been tremendous reduction of wealth in 2022. A lot of this has to do with the reversal of easy monetary policy. In the U.S. the Federal Reserve is withdrawing liquidity and reducing M2 money supply.

Across asset classes, there has been no safe place to hide in 2022. Most asset have negative returns, with the exception of energy stocks and a few value stocks with strong cash flows. This shows the market sensitivity to discount rates. Some assets with long-maturity cash flows, like tech stocks (NASDAQ) have particularly come under pressure.

There is a clear common factor across markets in 2022, which is monetary policy. The Federal Reserve has been extremely aggressive in tightening. We believe this is due to a fundamental policy error in 2021. The Fed was late to recognize the growing inflation problem.

Capital will be more scarce as financial conditions are tightened. We believe that this will be a severe drag on growth.

Even before the monetary tightening, growth was slowing. This will likely transfer in lower cyclical inflation. However, “supply side” inflation might continue to persist, as monetary policy cannot address these issues.

Our view is that inflation will persist above the Fed’s 2% target. Inflation may have peaked, but will likely remain structurally higher going forward. We expect roughly 4-5% inflation in 2023.

There is a toxic mix emerging for policy makers of high inflation, declining real incomes, and slowing growth. Consumer confidence has crashed.

The employment market has remained relatively strong. Consumption patterns indicate that the consumer is spending their excess savings from the pandemic and adding more debt.

Here are our takeaways:

Global Marcroeconomics

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02/06/202202/06/2022

🔥 Fed, Inflation, Interest Rates, Quantitative Tightening 📉

Fed money printer goes into reverse: What does it mean for crypto?

What will happen to the crypto markets when quantitative tightening takes full effect and the Federal Reserve shelves the money printer?

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The United States Federal Reserve is starting the process of paring back its $9 trillion balance sheet that ballooned in recent years in a move called quantitative tightening (QT).

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Analysts from a crypto exchange and financial investment firm have conflicting opinions about whether QT, starting on Wednesday, will put an end to a decade of unprecedented growth across crypto markets.

Laypeople can consider QT the opposite of quantitative easing (QE), or money printing, which the Fed has been engaged in since the start of the COVID-19 pandemic in 2020. Under QE conditions, more money is created and distributed while the Fed adds bonds and other treasury instruments to its balance sheet.

The Fed plans on shrinking its balance sheet by $47.5 billion per month for the next three months. In September of this year, it plans on a $95 billion reduction. It aims to see its balance sheet reduced by $7.6 trillion by the end of 2023.

.

Fed money printer goes into reverse: What does it mean for crypto?

—–

The global venture ecosystem continues its slowdown in Q3’22 as funding decreases 34% quarter-over-quarter.

.

Global venture funding reached $74.5B in Q3’22, hitting a 9-quarter low. The new funding level represented a 34% drop quarter-over-quarter — the largest quarterly percentage drop in a decade — and a 58% decline from the investment highs reached in Q4’21.

​Deal activity hit 7,936 deals total, marking a 9.5% quarterly drop and a 7-quarter low.

.

US-based companies raised $36.7B, accounting for just under half of global Q3’22 funding. Some of the quarter’s largest rounds in the region went to companies including TeraWatt Infrastructure, TerraPower, and EnergyX.

Other Q3’22 highlights across the venture ecosystem include:

Q3’22 saw only 25 new unicorns (private companies valued at $1B+) — the lowest unicorn birth count since Q1’20. The US accounted for the majority (14) of these births. Leading entrants include Zhiji Auto ($4.4B valuation), Tridge ($2.7B), and 21.co ($2B).

100M+ mega-rounds collectively accounted for $29.6B in Q3’22, marking a 9-quarter low and a 44% drop QoQ. Mega-round deal count dropped in all major regions to hit 144 in Q3’22, also a 9-quarter low.

Retail tech funding declined 33% QoQ to $8.5B, even as deals ticked up 5% to 776. Average deal size YTD clocked in at $24M, down 35% compared to 2021 averages.

The fintech sector also continued to contract. With $12.9B raised across 1,160 deals, Q3’22 was the weakest quarter the sector has seen since Q4’20.

Global digital health deals fell to their lowest levels in 5 years, with $5B raised across just 419 deals. The US led, accounting for more than half (58%) of total digital health funding at $2.9B.

.

State of Venture Q3 2022 Report

Global Marcroeconomics

Let’s start with the big picture.

There has been tremendous reduction of wealth in 2022. A lot of this has to do with the reversal of easy monetary policy. In the U.S. the Federal Reserve is withdrawing liquidity and reducing M2 money supply.

There is a clear common factor across markets in 2022, which is monetary policy. The Federal Reserve has been extremely aggressive in tightening. We believe this is due to a fundamental policy error in 2021. The Fed was late to recognize the growing inflation problem.

Capital will be more scarce as financial conditions are tightened. We believe that this will be a severe drag on growth.

Even before the monetary tightening, growth was slowing. This will likely transfer in lower cyclical inflation. However, “supply side” inflation might continue to persist, as monetary policy cannot address these issues.

Our view is that inflation will persist above the Fed’s 2% target. Inflation may have peaked, but will likely remain structurally higher going forward. We expect roughly 4-5% inflation in 2023.

There is a toxic mix emerging for policy makers of high inflation, declining real incomes, and slowing growth. Consumer confidence has crashed.

The employment market has remained relatively strong. Consumption patterns indicate that the consumer is spending their excess savings from the pandemic and adding more debt.

Here are our takeaways:

Global Marcroeconomics

Fed money printer goes into reverse: What does it mean for crypto?

What will happen to the crypto markets when quantitative tightening takes full effect and the Federal Reserve shelves the money printer?

.

The United States Federal Reserve is starting the process of paring back its $9 trillion balance sheet that ballooned in recent years in a move called quantitative tightening (QT).

.

Analysts from a crypto exchange and financial investment firm have conflicting opinions about whether QT, starting on Wednesday, will put an end to a decade of unprecedented growth across crypto markets.

The Fed plans on shrinking its balance sheet by $47.5 billion per month for the next three months. In September of this year, it plans on a $95 billion reduction. It aims to see its balance sheet reduced by $7.6 trillion by the end of 2023.

.

Fed money printer goes into reverse: What does it mean for crypto?

Deal activity hit 7,936 deals total, marking a 9.5% quarterly drop and a 7-quarter low.