Global VC investment is likely to continue to fall throughout the final quarter of 2022 as Q3 sees the third consecutive drop in deals and funding value, according to the Q3 2022 edition of Venture Pulse – a quarterly report, published by KPMG Private Enterprise.
The report, which analyses key VC deals and trends globally, reveals that global VC funding fell to a nine-quarter low of $87 billion in Q3 2022, with levels not seen since 2020 in the Americas, Europe, and Asia. The decline in the number of deals was even more marked during the quarter, with just 7,817 VC deals globally—the lowest volume since Q4 2017.
While annual fundraising reached $220 million at the end of Q3 2022 – on track to rank as the second highest year for fundraising ever next to 2018 – VC investors were more critical with their investments, becoming increasingly cautious, placing a laser focus on profitable companies, and those with sustainable business models or market-leading innovators, such as SpaceX which closed $1.9 billion in capital.
Consumer facing companies such as e-commerce and food delivery groups are losing traction amongst investors. Rising inflation, climbing interest rates and recessionary concerns are raising questions about a potential shift in consumer buying behaviours. However, a growing energy crisis – particularly in Europe – the continued effects of the pandemic, and increased pressures on businesses means some sectors remain of high-interest to investors. Clean energy, fintech, biotech, cyber and B2B; including AI and machine learning start-ups and scale-ups, continue to be popular.
During Q3 2022, all major regions attracted at least one $1 billion-plus megadeal. As well as US-based SpaceX raising $1.9 billion, Germany-based Celonis raised $1.4 billion, China-based Sunwoda EVB raised $1.2 billion, Sweden-based Northvolt raised $1.1 billion, and US-based TerraWatt Infrastructure raised $1 billion.
