[author: Carlos Juarez]

According to data aggregated by Carta, an ownership and equity management platform, private capital raising trends noticeably shifted in 2022. Companies in Carta’s database raised $107 billion in 6,123 deals in 2022. Overall, deal count declined by 29% and capital raised dropped by 50% in 2022 compared to 2021. While venture deals in 2021 broke historic records, a broader examination of data from the last seven years points to 2022 figures remaining consistent with a steady historical increase in venture capital activity. Compared to 2020, for example, 2022 deal count increased by 4% and the amount of capital raised increased by 15%.

Deals of $5 million or less accounted for almost 50% of all capital raised in 2022, with fewer “mega deals” completed. The average period elapsed between rounds increased in the last quarter of 2022 with the average time between a Series A round and a Series B round lengthening to about two years and five months. Series D rounds dropped dramatically in 2022 among Carta companies, raising just below $650 million in 2022. Quarter-over-quarter, Series C deal count rose by 13% and Series E+ rounds raised 10% more capital. Median pre-money valuations of early-stage companies dropped slightly from $12 million in 2022 Q1 to $7.8 million in 2022 Q4. The gap between Series A and Series B valuations continues to shrink with median Series B valuations of $12 million in 2022 Q4 only 54% larger than median Series A valuations, compared to 156% a year ago. Unicorn valuations, or company valuations of over $1 billion, are no longer common in late-stage companies. The median valuation of late-stage companies dropped to $949 million in 2022 Q3 and down further to $436 million in 2022 Q4.

Capital raising completed between priced rounds, known as bridge rounds, made up 31% of all Series D funding in 2022 Q4. In addition, dilution rates remained low in 2022, attributable to both declines in deal sizes and reliance on bridge rounds. Amid tech layoffs, many companies extended deadlines to exercise stock options allowing for longer than the traditional 90 days for employees to decide whether to exercise. Employees exercised merely 32% of their vested options before expiration during 2022 Q4.

Read Carta’s State of Private Markets: Q4 and 2022 in review for more data and trends.

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