In a year of unprecedented market challenges, venture capital (VC) investors have shown a reluctance towards high-value investments, resulting in a major setback for big-ticket deals. This sentiment has been reflected in the lack of billion-dollar deals in 2022, which have felt the brunt of this dampened investor confidence, reveals GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Financial Deals Database reveals that VC funding activity took a hit in 2022 and consequently deals volume with disclosed funding value suffered a 12.9% year-on-year decline.
Aurojyoti Bose, Lead Analyst at GlobalData, comments: “2022 saw the announcement of only four VC deals valued more than $1 billion as compared to announcement of 22 during the previous year. Similarly, the number of deals valued more than $100 million also decreased from 1,330 in 2021 to 741 in 2022.”
Meanwhile, low value deals (Investment value less than or equal to $10 million) dominated the VC funding landscape by registering the highest number during 2022. In fact, despite experiencing a decline, the share of low value deals as a percentage of the total VC deals volume with disclosed funding value increased from 64.1% in 2021 to 67% during the year.
In contrast, the share of deals valued more that $100 million as a percentage of the total VC deals volume with disclosed funding value decreased from 5.3% to 3.4%.
Bose concludes: “As most of the world is experiencing economic headwinds, investors seem to have become more cautious while committing big investments. However, as the markets stabilize, GlobalData expects to see renewed interest in high-value deals. In the meantime, startups should focus on building sustainable businesses that can weather the current economic headwinds.”