US VC Deal Spending Falls by Half in Second Quarter, Report Says (bloomberg.com) 14
Venture capitalists are funding fewer startups, especially at the earliest stages of a company's life, according to new data from research firm PitchBook. From a report: In the US, investors financed 3,011 startup funding deals last quarter, about a third fewer than a year ago. And they spent a lot less cash: $39.8 billion, down by nearly half from the same period last year. Take out the more than $6.5 billion investors spent on payments company Stripe, and the total looks even worse, said PitchBook analyst Kyle Stanford.
The biggest drop came in angel or seed deals, which is financing for startups usually still at the concept stage. In that category, there were half as many funding deals as there were a year earlier. Those early funding rounds -- when young companies are either nurtured or starved -- are generally considered to be critical to the health of the venture ecosystem. But the lower deal numbers aren't all bad news, Stanford said. In the heady days of the pandemic boom, there were "probably too many" startups raising money because the public markets can only support so many public offerings, he said. "Starting these companies slower is probably healthy."
The biggest drop came in angel or seed deals, which is financing for startups usually still at the concept stage. In that category, there were half as many funding deals as there were a year earlier. Those early funding rounds -- when young companies are either nurtured or starved -- are generally considered to be critical to the health of the venture ecosystem. But the lower deal numbers aren't all bad news, Stanford said. In the heady days of the pandemic boom, there were "probably too many" startups raising money because the public markets can only support so many public offerings, he said. "Starting these companies slower is probably healthy."
Return to normalcy (Score:4, Insightful)
But the lower deal numbers aren't all bad news, Stanford said. In the heady days of the pandemic boom, there were "probably too many" startups raising money because the public markets can only support so many public offerings, he said. "Starting these companies slower is probably healthy."
VC spending went up by 66% in 2019 [statista.com], and had another huge spike in 2021. If you follow the trendline of VC spending from 2006-2018 we would have about $120 billion in VC funding in 2023, which is half the amount from 2022. So it looks like this year we have finally returned to some level of normalcy.
Re: (Score:2)
Government abuses Job Creation as the metric to pat themselves and the country on the back all the time, making the human demand on the ass-end of that return to "normalcy" quite static.
The end result of that will not exactly be labeled "normal", unless Government somehow sells a massive increase in unemployment as some kind of cool fashion statement.
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The end result of that will not exactly be labeled "normal", unless Government somehow sells a massive increase in unemployment as some kind of cool fashion statement.
VC investment accounts for about 0.1% of US GDP, so a return to normalcy for VC investment is not going to have a huge effect on unemployment. My guess is the average employee at a VC backed firm probably also makes far more than median US wages. So even if there was a linear relationship between VC backed funding and job creation by VC backed firms, cutting total VC investment in half would perhaps increase unemployment by 0.02-0.04 percent. That is not a massive increase in unemployment.
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Tell me how many VC investments are funding current and future jobs. Then we can talk about actual impact instead of tossing GDP against the wall to watch it bounce.
In 2015, one-fifth of all US public companies took in VC funding. That certainly doesn't sound like a fraction of a percent impact. Now we get to sit back and watch what happens when this "tiny" VC pebble of change you speak of drops into the employment pool. Perhaps we'll just hope the ripples could never turn into waves.
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AI! LLM! Singularity! Give me money. (Score:3)
The bubble can't burst quickly enough for my taste.
World is healing (Score:2)
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One can hope.
But I'm maybe weird, but where is the Vulture Capitalists' (VC's) money going? This should be HIGHLY concerning.
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This is a positive step in the right direction. (Score:2)
Venture Capitalists throwing less money at ridiculous bullshit is not an overall negative. Maybe not every single person that has a brain-fart to create a business card with whatever the latest buzzword is in tech circles actually has an idea worth investing in? Crazy concept, I know.
One day (Score:2)
We will be rid of the useless and imaginary job that is "venture capitalist".