Venture capital

VCs invested $120 billion in Q2—27% less than last year, but still a huge sum

Q2's total investment exceeds any quarterly total for 2019 or 2020.
article cover

Francis Scialabba

· less than 3 min read

Stay up to date on emerging tech

Drones, automation, AI, and more. The technologies that will shape the future of business, all in one newsletter.

The numbers are in, and in Q2, global venture funding did indeed take a big hit.

VCs dished out $120 billion in the time period, per Crunchbase—down 26% from the previous quarter, and 27% year over year.

Grain of salt time: That’s a big slowdown, but the funding amount is still 20+% more than any quarter in 2020 or 2019. On top of that, there’s a ton of dry powder left for venture investors to dip into: US VCs alone have raised nearly $122 billion so far this year, per Pitchbook, a staggering amount given that they raised a total of ~$139 billion across all of last year.

  • Even Sequoia, which was among the first VCs to warn of trying times ahead, is reportedly raising two brand-new funds totaling up to $2.25 billion.

This isn’t to say that the pullback isn’t real, or without consequences. Some high-flying startups,  like Klarna, have raised down rounds (aka rounds at lower valuations than they once had) and some experts expect we’ll see more in the coming months.

Late-stage companies, which make up a majority of VC investment dollars, are feeling the burn the most, with a 30% decline in VC dollars compared to the same quarter last year. Early-stage companies are comparatively better off, but still down 17% year over year.

  • Seed-stage companies, on the other hand, are still in 2021 mode: In Q2, they grew investment 9% year over year, to $9.1 billion.

Looking ahead…Venture funding is likely to continue trending down in the immediate months and quarters, and investors will probably continue pressuring their portfolio companies to prioritize profitability over growth. But there’s still a lot of capital sloshing around.

Stay up to date on emerging tech

Drones, automation, AI, and more. The technologies that will shape the future of business, all in one newsletter.