Despite declining deal counts in Q4, 2022 was a strong year for VC

Total deal counts across angel, seed and VC deals for Q4 2022 were the lowest of the year at 2,935 deals, a decrease of 670 deals as compared to Q3 2022, according to Q4 data from PitchBook-NVCA Venture Monitor Q4 2022. Despite low deal counts for Q4, 2022 is still on track to come in close behind 2021, which marked the highest deal count since the data began being collected in 2012. A strong total deal count alongside a high deal value reflects a successful year for venture capital, even amid economic strain caused by high interest rates, the Russian-Ukrainian war, and lingering COVID-19 impacts. 

PitchBook reports the total deal count for 2022 to be 15,852 across angel, seed, and VC (with another 2,138 that PitchBook estimates to have occurred but have not yet been formally identified) with a total deal value of $283.3 billion.These totals are approaching those of 2021, which had a deal count of 18,521 and a deal value of $344.7 billion. 

Of the 2,935 observed deals (i.e., deals that have been discovered by, or reported to, PitchBook) in Q4, 1,060 of them were angel/seed, 919 early VC, 772 later VC and 184 venture growth deals. Although this is a decline in deal counts across all equity investing stages from an all-time high in Q1 2022, a slight decline may be due to more recent deals being less likely to have been made public and the difference may, therefore, disappear once more data is collected.

As for exit activity, PitchBook observed 1,208 exits throughout 2022 with another 183 exits that were estimated to have occurred but have not yet been formally identified. There was a significant decline in exit value in 2022. Total exit value was $71.4 billion for the year, the second lowest exit value since data collection began in 2012, and a 90.5% decline from 2021’s total exit value. PitchBook reports that the decline in exit count and value is in large part due to VC-backed startups and investors struggling to liquidate. 

Acquisitions comprised 47% of total exit value at $33.5 billion, differing from previous years that had seen a greater share of total exit value come from public listings. In 2022, public listings generated about 48% of total exit value at $34.4 billion and buyouts contributed about 5% of total exit value in 2022.

As of September 2022, global VC funds’ dry powder reached $1,258.3 billion, according to PitchBook. This buildup of dry powder is a result of the increased presence of nontraditional VC investors (including corporate venture capital and “crossover” investors, defined as public equity market investors active in multiple segments of the private investment markets). In Q4 2022, only $24.1 billion in deal value was contributed by nontraditional investors, the lowest quarterly value in three years. Nontraditional investors have avoided risky investment profiles, slowing their capital deployment to VC and contributing to the dry powder buildup.