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October 11, 2022 | Tom Ballard

Crunchbase News reports steep decline in start-up funding in Q3

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.

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