Crunchbase News reports that North American start-up investment for the third quarter totaled less than half its year-ago levels, driven by an even steeper drop in late stage financing.
Overall, investors put $39.7 billion to work in seed through growth stage deals in Q3, down 53 percent year-over-year (YoY) and down 37 percent compared to Q2. The YoY decline was most pronounced at late stage, which was down 63 percent in the just-ended quarter.
There were two notable conclusions:
- The scaling down is occurring after extremely tall heights, as 2021 surpassed prior funding records significantly. “So, while an over 50 percent year-over-year funding decline may make for an alarming headline, we’re still close to where we were a couple years ago. And at the time, that was considered a pretty good period for start-up funding,” Joanna Glasner writes.
- While late stage is faring worse than early stage and seed, there is still a large amount of dry powder in the coffers of venture investors. “It’s likely they’ll begin spending more profusely once more consensus emerges around valuations and exit conditions improve,” Glasner wrote.