Global funding slowed dramatically in the second quarter of 2022 as investors shied away from later-stage funding bets. It also marked the first quarter with a significant drop in funding since the beginning of 2020.
Funding reached $120 billion, the lowest amount recorded for a single quarter since the beginning of 2021, Crunchbase data shows.
Second-quarter funding fell 26% quarter over quarter from $162 billion in the first quarter and 27% year over year from $165 billion in the second quarter of 2021.
It’s worth noting that YoY comparisons are against 2021, which was a record year for venture funding. Funding for the second quarter of 2022 still exceeded every quarter in 2020, when each quarter tracked below—and in some cases well below—$100 billion.
Late stage impacted
The funding stage most impacted last quarter was late-stage funding and technology growth funding, which fell 31% quarter over quarter and 38% year over year. The scaling back of late-stage funding is not that surprising in a period when tech IPOs have slowed and growth investors have signaled an interest in funding companies at earlier stages.
All told, funding at late stage came in at $66.7 billion, down from $108.4 billion in the second quarter of 2021.
Early stage slows
Early-stage funding fell by 18% quarter over quarter and by 9% year over year. Just over $44 billion was invested across more than 2,000 deals. This compares to $48.7 billion a year ago. Based on an analysis of Series A and B fundings, we attribute the decline to a drop in outsized rounds and less so to a decline in deal counts.
Bucking the trend, seed funding remained strong last quarter, growing 9% year over year by funding amount and showing that, for now at least, this stage is less impacted by the downturn.
Still, seed funding fell quarter over quarter by around 18% compared to Q1 2022.
The seed stage’s relative strength is likely because startups at this stage tend to be the least impacted by the current market climate, as funding is not tied to revenue. In a market that has slowed down, the best funding opportunities are often sought at the earliest funding stages.