Venture capital’s 2022 slowdown, in 4 charts

In the first three months of 2022, global funding has fallen 19% to $144 billion from last quarter, according to new data from CB Insights—the largest quarter-over-quarter percentage decline in nearly 10 years. It’s not all bad news: Those numbers are still high, and early and mid-stage valuations are up—but there is a drag in both valuations and exits for late-stage deals, an early indication that there is trouble ahead, and it will likely trickle down to the rest of the private markets in the coming months.

Private companies always take time to follow their public peers. While investors can trade in and out of a publicly-traded stock near-instantly, private funding deals take time to value and close. Early-stage companies are the furthest removed from the public markets, so it shouldn’t be a surprise that early-stage deals are the last to be impacted by things like market volatility or rising interest rates. We likely won’t see the full extent of some of these macro-economic indicators for many more months.

Here are four critical pieces of data from quarter one that investors should be watching closely:

Investors are scaling back

Mega-round funding is down 30% from last quarter, and it’s down in every sector except for angel investors, who tend to be most active in the early stages. Asset or investment management companies, corporations and corporate venture funds, private equity, and venture capital investors have all scaled back the size of deals they are signing. Valuations are up for early and mid-stage startups, but the median valuation for late-stage companies has begun to drop.

Deals are getting smaller

There were fewer mega-rounds this year (meaning those above $100 million in size). While around 59% of venture dollars were invested in mega-rounds last quarter, that number is closer to 51% in the first quarter. 

Funding for U.S.-based startups shrinks

There’s still plenty of funding going toward startups in the U.S.—they received 49% of this quarter’s overall global funding—but the dollar-amount is at a five-quarter low after a record 2021.  Funding was down in every major U.S. City apart from Philadelphia, Atlanta, and Dallas—although, there were more deals signed in the first quarter than there were the year prior.

Time to look abroad?

While the number of mega-rounds is on the decline in the U.S. And Asia, there was an uptick this quarter in large rounds in Europe, Canada, and Australia. The U.S. And Asia still comprise the lion’s share of the global venture market. 

Until Monday,

Jessica Mathews
Twitter: @jessicakmathews
Email: [email protected]
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Netomnia, a Tewkesbury, Gloucestershire, U.K.-based fiber network startup, raised $385 million in funding led by DigitalBridge Investment Management, and was joined by investors including Soho Square Capital and Advencap.

- LogicSource, a South Norwalk, Conn.-based procurement services and technology solutions provider, raised $180 million in funding from FTV Capital. 

- Jüsto, a Mexico City-based online grocer in Latin America, raised $152 million in Series B funding led by General Atlantic and was joined by investors including Tarsadia Capital, Citius, Arago Capital, Foundation Capital, Quiet Capital, and others. 

- Clarify Health, a San Francisco-based cloud analytics and value-based payments platform company, raised $150 million in Series D funding led by SoftBank Vision Fund 2 and was joined by funds and accounts managed by BlackRock and Memorial Hermann Health System. It was also joined by investors including Insight Partners, Spark Capital, KKR, Aspenwood Ventures, Rivas Capital, and Sigmas Group.

- SamCart, an Austin and Washington D.C.-based eCommerce platform for creators, raised $82 million in Series B funding led by Eldridge and was joined by investors including TTV Capital, Fin VC, the George Kaiser Foundation, and eGateway Capital.

- EDO, a Los Angeles-based data, measurement, and analytics software company, raised $80 million in funding from Shamrock Capital.

- Coro, a New York-based cyber security platform, raised $60 million in Series C funding led by Balderton Capital and was joined by Jerusalem Venture Partners.

- OpenPhone, a remote-based phone system for business, raised $40 million in Series B funding led by Tiger Global, and was joined by investors including Craft Ventures, Slow Ventures, Garage Capital, Worklife Ventures, and others.

- e-Zinc, a Toronto-based energy storage company, raised $25 million in Series A funding led by Anzu Partners, BDC Capital, Toyota Ventures, and Eni Next. 

- ReadySet, a remote-based database acceleration company, raised $24 million in Series A funding led by Index Ventures and was joined by investors including Amplify Partners and other angels.

- Eleos Health, a Boston and Tel Aviv-based behavioral health application for voice A.I., raised $20 million in Series A funding co-led by F-Prime Capital and Eight Roads Ventures, and was joined by investors including aMoon Fund, lool ventures, and Arkin Holdings.

- Better Origin, a Cambridge, U.K.-based agritech startup using A.I.-powered insect mini-farms for the food chain, raised $16 million in Series A funding led by Balderton Capital and was joined by investors including Fly Ventures and Metavallon VC.   

- Community Gaming, a New York-based online gaming tournament software platform that offers cryptocurrency in exchange for gameplay, raised $16 million in Series A funding led by SoftBank Group's SB Opportunity Fund and was joined by investors including Animoca Ventures, Binance Labs, BITKRAFT Ventures, and Griffin Gaming Partners.

- Codetta Biosciences, a Morrisville, N.C.-based medical platform developer for clinical diagnostics, raised $15 million in Series A funding led by Anzu Partners and was joined by investors including Genoa Ventures and VC23.

- Cottage, a San Francisco-based software platform and marketplace allowing homeowners and contractors to build accessory dwelling units (ADUs), raised $15 million in Series A funding led by Fifth Wall and was joined by investors including 1Sharpe Ventures, DivcoWest, Susa Ventures, and Base10 Partners. 

- Creative Juice, a San Francisco-based creator-focused banking platform, raised $15 million in Series A funding led by Acrew Capital and was joined by angels and investors including lawyer Meena Harris, Concrete Rose, former NFL athlete Larry Fitzgerald, TikToker Jared Waldrom, and others. 

- KarmaCheck, a San Francisco-based company providing background checks during the hiring process, raised $15 million in Series A funding led by Velvet Sea Ventures and was joined by investors including Parameter Ventures, One Way Ventures, NextView Ventures, and Dash Fund. 

- Doceree, a Parsippany, N.J.-based physician marketing platform, raised $11 million in Series A funding led by Eight Roads Ventures and was joined by investors including F-Prime Capital and Alkemi Growth Capital. 

- Prepared, a New York-based emergency services technology developer, raised $9.8 million in seed funding led by First Round and was joined by investors including Gradient Ventures, 8VC, and Risk and Return. 

- Liminal, an Emeryville, Calif.-based battery manufacturing intelligence company, raised $8 million in Series A funding co-led by Good Growth Capital and The University of Tokyo Edge Capital Partners and was joined by investors including Volta Energy Technologies, Helios Capital Ventures, and Impact Science Ventures. 

- Landed, a Bay Area, Calif.-based recruitment platform for the restaurant and hospitality industries, raised $7 million in seed funding led by Javelin Venture Partners and Blockchain Capital, and was joined by investors including Lightspeed Venture Partners and other angels. 

- Waterplan, a San Francisco-based water resilience planning SaaS platform, raised $7 million in seed funding led by Transition Global and Giant Ventures and was joined by angel investors including Leonardo DiCaprio, Holly Branson, Joe Montana, Manu Ginobili, and others.

- Flow Club, a San Francisco-based virtual community for remote and flexible workers, raised $5 million in funding led by Worklife Ventures and was joined by investors including Day One Ventures, Soma Capital, Y Combinator, Hustle Fund, Nomo Ventures, Night Capital, Hyphen Capital, and others.

- Trustap, a Cork, Ireland-based digital transaction platform, raised $3.4 million in seed funding led by MiddleGame Ventures and was joined by investors including Act, Atlantic Bridge, and angel Liam Casey. 

- Tribute, a New York-based video group montage service, raised $3 million in seed funding led by Reign Ventures and was joined by angels including co-founder of Equinox Lavinia Errico, co-founder of Casper Neil Parikh, and others.

- ​​Arogga, a Dhaka, Bangladesh-based online pharmacy, raised $1.3 million in seed funding from investors including Hyper, Ratio Ventures, Sketchnote Partners, SRB Ventures, Demand Curve’s CEO Julian Shapiro, IDLC, and others. 

PRIVATE EQUITY

- Brookfield Business Partners agreed to acquire CDK Global, a Hoffman Estates, Ill.-based software for auto dealerships provider. A deal is valued at $8.3 billion, including debt. 

- Turn/River Capital agreed to acquire Tufin, a Boston-based cyber security automation company, for $570 million.

- Aurelius acquired McKesson UK, a Coventry, U.K.-based parent company to healthcare businesses including LloydsPharmacy, John Bell & Croyden, and AAH Pharmaceuticals. Financial terms were not disclosed.

- Foreside, backed by Genstar, acquired Cipperman Compliance Services, a Wayne, Pa.-based chief compliance officer services provider to alternative fund managers, registered funds, wealth managers, broker-dealers, family offices, and regulated fintech companies. Financial terms were not disclosed. 

- TSG Consumer Partners agreed to acquire a majority stake in Cadogan Tate Group Holdings, a London-based logistics group. As part of the deal, Cadogan Tate will retain a minority stake. Financial terms were not disclosed.

- Worldwise, a portfolio company of A&M Capital Partners, acquired Pet Factory, a Mundelein, Ill.-based pet chews, treats, toys, and accessories company. Financial terms were not disclosed. 

- York Capital Management’s private equity group acquired a majority stake in Healthcare Linen Services Group, a St. Charles, Ill.-based healthcare laundry services provider in the Midwest and Central United States. Financial terms were not disclosed. 

EXITS

- Hellman & Friedman agreed to acquire a majority stake in Information Resources, a Chicago-based market analytics business, backed by Vestar Capital Partners and New Mountain Capital. Hellman & Friedman plan to merge Information Resources with portfolio company NPD Group. A deal is valued at $8 billion, including debt. 

 - Gryphon Investors acquired Vision Innovation Partners, Annapolis, Md.-based  ophthalmology and optometry services provider, from Centre Partners. Financial terms were not disclosed.

- PSP Capital acquired StormTrap, a Romeoville, Ill.-based stormwater management systems provider, from Warren Equity Partners. Financial terms were not disclosed.

OTHER

-  NowVertical acquired Allegient Defense, an Arlington, Va.-based systems engineering and technical assistance provider to the Department of Defense, for $10.4 million.

- CMA CGM acquired Gefco, a Puteaux, France-based auto transport company, from Russian Railways and Stellantis. Financial terms were not disclosed. 

- EY-Parthenon, the strategy consulting business of EY, acquired Quantitative Scientific Solutions, a Washington D.C.-based analytics consulting firm. Financial terms were not disclosed.

- POS Nation acquired Bottle POS, a Peachtree Corners, Ga.-based cloud-based liquor point of sale software provider. Financial terms were not disclosed.

- Talend acquired Gamma Soft, a Paris-based change data capture company. Financial terms were not disclosed. 

IPOS

- G7, a Hong Kong-based fleet management company, is in talks with China International Capital, Citigroup, and Morgan Stanley about an IPO in Hong Kong, according to Bloomberg. A deal could value the company at $500 million. G7 is backed by Tencent Holdings. 

FUNDS + FUNDS OF FUNDS

- I Squared Capital, a Miami-based investment manager, raised $15 billion for a fund focused on climate change, supply chains, and energy transition. 

- Lead Edge Capital, a New York and Santa Barbara, Calif.-based investment fund, raised $2 billion for a sixth fund focused on software, internet, and consumer businesses.

- Turn/River Capital, a San Francisco-based growth equity and buyout firm, raised $1.4 billion for a fifth fund focused on software and SaaS companies. 

- Imaginary Ventures, a New York-based venture capital firm, raised $500 million for a third fund focused on early and late stage companies. 

- Wireframe Ventures, a San Francisco-based venture capital firm, raised $77 million for a second fund focused on seed and pre-seed investments in the health and climate industries. 

PEOPLE

- Imaginary Ventures, a New York-based venture capital firm, promoted Kelly Dill and Logan Langberg to partner. 

- OMERS Private Equity, the private equity arm of the Toronto-based pension plan, promoted Eric Haley to senior managing director, head of North America, Geoffrey Bird to managing director, head of business services, Tyler Craig to managing director, debt capital markets and business development, and hired Lane McDonald as managing director, strategy & operations. Formerly, McDonald was with Partners Group.