US venture capital dealmaking slows on economic uncertainty

July 14 (Reuters) – Venture capital dealmaking in the United States dipped in the first half of 2022, as investors refrained from signing large checks for startups due to uncertain macroeconomic conditions and market turmoil, according to a report on Thursday. avoided.

The value of deals made in the first half of 2022 fell to $144.2 billion, from $158.2 billion in the same period last year, driven by fears of an impending recession, raging inflation and aggressive rate hikes in the stock market. .

VC dealmaking hit an all-time high of more than $340 billion in 2021, as firms bet on high-tech, biotech, healthcare and fintech startups, buoyed by additional liquidity and a liberal monetary policy.

While investments in late-stage firms saw average size and valuation decline significantly from recent highs, funding in early-stage companies in the second quarter also fell well below record levels set in the previous year, according to reports from Pitchbook and National Venture Capital Association (NVCA)

The pace of VC activity is also expected to slow in the second half of 2022 as the threshold for closing deals increases and pricing uncertainty extends to the early stages of the investment cycle.

With initial public offerings (IPOs) on ice in the backdrop of falling valuations and volatile trading on US exchanges, the door for potentially billions of dollars of exits has also been closed.

“Exits are very short-lived, while late-stage companies tend to act with caution as a result of bearish public market activity,” said John Gabert, PitchBook’s founder and CEO.

The IPO market hit a 13-year low in the second quarter, with only eight companies listed. Only 22 VC-backed companies managed to list successfully in the first half of the year, compared to 183 in the same period in 2021 and 108 in 2020, the report said.

(Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Shailesh Kuber)