NVCA: Startups faced headwinds in the Q1 U.S. venture market
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The first three months of 2022 showed that startups ran into economic headwinds while raising money from U.S. venture capitalists, according to early results from data collected by the Pitchbook and the National Venture Capital Association (NVCA).
The change in economic conditions is a lagging indicator and so the NVCA believes that this change will be reflected more in the upcoming quarters. The full report will come out later from the PitchBook-NVCA Venture Monitor.
The economic headwinds included volatile public markets, long-awaited interest rate hikes by the Fed,and the ongoing war in Ukraine. That has caused the venture market to shift from its constant “up-and-to-the-right” movement. This has catalyzed a marked decline in the number of initial public offerings, a vital outlet for VC-backed companies and their investors, at a time when the number of unicorns has grown to well over 1,000 globally.
Economic conditions created by years of near-zero interest rates have fostered nontraditional investors’ growing interest and activity in the private markets, the NVCA said. These investors, and their large swaths of capital, have been major forces in many of today’s VC trends. For many reasons, the venture market sits at a crossroads, entering this time of uncertainty as a much different market than it was prior to the global financial crisis (GFC) or the dot-com bubble.
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