[author: Hanson Hairihan]

The CB Insights’ State of Venture Report for the third quarter of 2022 notes that global venture funding declined to $74.5 billion in the third quarter, down 58% from the funding peak in the fourth quarter of 2021. This represents a quarter-over-quarter contraction of 34%, the largest quarterly percentage drop in a decade, with the number of deals declining by 10% to 7,936 – the lowest level since 2020. European startups experienced the largest decline in funding with 1,584 deals raising $14.8 billion in the third quarter this year, a 36% drop quarter over quarter and a seven-quarter low. The United States and Asia also saw sharp drops in quarterly funding with U.S. funding declining by 32% to $36.7 billion raised in 2,866 deals and Asia funding declining by 33% to $20.1 billion.

The number of companies that achieved unicorn status dropped across regions to 25, the lowest count since first quarter of 2020; 14 of these were in the United States. There were 144 mega-rounds completed globally in the third quarter, which accounted for $29.6 billion in funding, representing a 44% quarter-over-quarter decline and a nine-quarter low. While M&A exits continued to decline, IPOs and SPACs rebounded, with the number of SPACs reaching the highest level since 2021.

Early-stage investing constituted 66% of the overall deal share. There was a 42% drop in median deal size for late-stage rounds, indicating investors’ shrinking appetite for late-stage Series E+ deals. Asia led early- , mid-, and late-stage deal share in the last quarter. By sector, global fintech funding declined by 38% to $12.9 billion in the third quarter 2022. The retail tech and digital health sectors also saw sharp drops. In the United States, Silicon Valley startups hit an 11-quarter low with $10.7 billion raised.

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