PitchBook summarized VC trends of the first half of 2022, released data suggesting positive economic outcomes for some start-ups.
Even with reported layoffs and weaker revenue growth at mature businesses, overall valuations have stayed in good shape, Pitchbook said.
State of early stage VC:
• QoQ early-stage valuations saw their first decline in ten quarters (as investors pull back)
• Deal values are increasing (QoQ +19%, as start-ups try to keep sufficient runway)
• Seed valuations grew by 33% since 2021 (maybe due to the time lag to fell the economic adverse conditions)
Late-stage VC has different picture:
• Deal value decreases (H1 22-on-full 2021 – 7%, as investors expect a delay in exits)
• Pre-money valuation is increasing (H1 22-on-full 2021 +10%)
• The biggest jump was in early-stage biotech and pharma.
• Fintech saw seed and early-stage median valuations rise.
IPOs and the exit market was weak:
• Lack of IPOs — a shortage of liquidity. It means that the investors can not pull back their funds to invest in new deals or return to their limited partnerships.
• That would negatively affect new rounds and may translate in more thorough due diligence and protectionist terms if the current economic climate continues or worsens over the next 12 months.