Global VC funding has seen a huge drop this year

(Image credit: Future)

Global venture capital (VC) funding saw a huge drop in the third quarter of 2022 as various large-scale challenges affected investor appetites, new research has claimed..

VC funding for the quarter declined 53% year-over-year, and 33% quarter-over-quarter, to $81 billion according to statistics from Crunchbase

This makes Q3 the weakest quarter for VC funding since the first quarter of 2020, when the pandemic initially kicked off.

Investment hit

Late-stage venture and growth funding were among the hardest-hit segments, with both seeing significant falls during 2022.

Around $40 billion was injected into the late-stage venture and private equity to venture-backed companies in the third quarter of 2022, a 40% decline quarter-over-quarter and a 63% fall year-over-year. 

However, some segments were much more resilient.

Global early-stage funding declined only 25% quarter-over-quarter and 39% year-over-year, to a total of $34 billion. 

Series A funding held up extremely well comparatively, falling just 23% year-over-year, while Series B Funding dropped 54% in the same period. 

Will funding recover? 

Crunchbase argued that its "not entirely clear" if funding has hit rock bottom or if it will fall even more in Q4, as investment can slow down over the summer months

The publication also highlighted that the record sums fundraised in 2021 and the first part of 2022 could place "additional pressure" on the markets. 

But it’s not all doom and gloom in the world of venture capital, Adobe recently announced the acquisition of online collaboration tool Figma for $20 billion, one of the largest acquisitions of a venture-backed private software company ever.

Will McCurdy has been writing about technology for over five years. He has a wide range of specialities including cybersecurity, fintech, cryptocurrencies, blockchain, cloud computing, payments, artificial intelligence, retail technology, and venture capital investment. He has previously written for AltFi, FStech, Retail Systems, and National Technology News and is an experienced podcast and webinar host, as well as an avid long-form feature writer.