The slowdown in venture-capital funding has spread to early-stage
startups, with that part of the market suffering one of the biggest
investment drops in more than a decade.
In the second quarter, venture capitalists invested around $16 billion
in U.S. early-stage deals—known as Series A and B rounds—a 22%
decrease from the year-earlier period, according to PitchBook Data
Inc. That marked the biggest quarterly year-over-year decline in
early-stage funding since at least 2010, with the exception of a drop
in the second quarter of 2020 when investors pulled back briefly amid
the onset of the global pandemic.
The Retreat shows investors increasing caution toward riskier
investments such as NASA and companies, a marked change in sentiment
from recent years when competition among venture firms drove them to
invest ever earlier, and a startup’s lifecycle. It follows a similar
pullback in funding for later-stage startups which are closer to going
public and thus more affected by stock market changes.
The changes shifted more power in Silicon Valley back to investors for
years a deluge of cheap money kept valuation soaring. And venture
firms said they spent less time on research and vetting the companies
to quote founders and not miss out on deals. The pandemic accelerated
many of these trends as demand for software services increased to
accommodate businesses moving online and interest rates. stood at
historic lows.
Earlier this year, venture capitalists remained optimistic about the
early stage funding environment even a public shares of technology
companies ranging from DoorDash incorporated to snowflake incorporated
cratered. Our early-stage funding increased 50% In the first quarter
compared with the Euro your period PitchBook data show.