Key Takeaways
- • Global venture capital investment reached $144.8 billion in Q1 2022, down from a record $191.9 billion in Q4 2021 but above every quarter of 2021 except the four record-breaking quarters, according to KPMG's Venture Pulse report.
- • Global VC deal count fell to 9,349 in Q1 2022 from 10,775 in Q4 2021, reflecting heightened caution from investors amid geopolitical and macroeconomic uncertainty.
- • Exit value plunged more than 60% quarter-over-quarter to $122.3 billion across 684 deals, from $344.2 billion across 941 deals in Q4 2021, as IPO activity stalled.
- • Americas VC investment fell to $77.6 billion from $103.3 billion, Asia dropped to a six-quarter low of $32.6 billion, while Europe rose modestly to $31.7 billion.
- • KPMG expects VC investment to remain relatively stable in Q2 2022 due to substantial dry powder, with investors favoring late-stage companies and proven bets.
Summary
Global venture capital investment totaled $144.8 billion in Q1 2022, according to KPMG's Venture Pulse report, covering the first quarter of 2022. The figure was a decline from the record $191.9 billion recorded in Q4 2021, but it exceeded all quarters of 2021 except the four consecutive record-breaking quarters that year. KPMG characterized the result as robust despite the drop.
Deal activity fell more sharply than dollar volume. The number of VC deals declined from 10,775 in Q4 2021 to 9,349 in Q1 2022. KPMG attributed the slowdown to a combination of factors, including the Russia-Ukraine war, rising inflation and interest rates, turbulence in global capital markets, supply chain challenges, and surging COVID-19 cases in several jurisdictions. These conditions likely prompted VC investors to become more cautious and focus on due diligence.
Regional performance diverged. Investment in the Americas fell from $103.3 billion to $77.6 billion, with the US accounting for $70.7 billion of the Q1 2022 total. Asia declined from $55.2 billion to $32.6 billion, a six-quarter low, which KPMG linked to geopolitical uncertainty, macroeconomic factors and regulatory concerns in China. Europe was the only region to increase, rising modestly from $31.5 billion to $31.7 billion. Corporate venture capital investment followed a similar pattern, rising in Europe to $14.4 billion while falling in the Americas to $30.8 billion and in Asia to $18.2 billion.
The number of $1 billion-plus megadeals fell to two in Q1 2022, Altos Labs and Checkout.com, both of which closed in the first three weeks of the quarter before the Ukraine crisis began. Altos Labs raised $3 billion, and Checkout.com raised $1 billion. Companies from seven countries attracted the ten largest deals. Other notable rounds included Flexport ($935 million) and Ramp ($750 million) in the Americas, and Wefox ($871 million) and Getir ($768 million) in Europe. In Asia, Byju, JD Property, Changan New Energy Vehicles Technology and Swiggy each raised rounds of $700 million or more. Global first-time VC financing was soft at $12.6 billion.
Exit activity was the weakest component. Exit value fell more than 60% quarter-over-quarter, to $122.3 billion across 684 deals from $344.2 billion across 941 deals in Q4 2021, following a record year for exits. KPMG's Conor Moore, Head of KPMG Private Enterprise in the Americas, said turbulent capital markets had "effectively slammed the door shut on most IPO activity for the moment" and that IPO activity would likely remain soft heading into Q2 2022.
Looking ahead, KPMG expects VC investment to remain relatively stable in Q2 2022, supported by significant dry powder. Jonathan Lavender, Global Head of KPMG Private Enterprise, said caution would likely guide investors, who are expected to favor late-stage companies and proven bets. That posture could pressure startups seeking first-time or early-stage financing. Lavender added that it was too early to assess the full effect of the Russia-Ukraine war on the broader VC market, noting that the large volume of capital raised by VC funds in recent quarters would seek deployment.
Deal activity fell more sharply than dollar volume. The number of VC deals declined from 10,775 in Q4 2021 to 9,349 in Q1 2022. KPMG attributed the slowdown to a combination of factors, including the Russia-Ukraine war, rising inflation and interest rates, turbulence in global capital markets, supply chain challenges, and surging COVID-19 cases in several jurisdictions. These conditions likely prompted VC investors to become more cautious and focus on due diligence.
Regional performance diverged. Investment in the Americas fell from $103.3 billion to $77.6 billion, with the US accounting for $70.7 billion of the Q1 2022 total. Asia declined from $55.2 billion to $32.6 billion, a six-quarter low, which KPMG linked to geopolitical uncertainty, macroeconomic factors and regulatory concerns in China. Europe was the only region to increase, rising modestly from $31.5 billion to $31.7 billion. Corporate venture capital investment followed a similar pattern, rising in Europe to $14.4 billion while falling in the Americas to $30.8 billion and in Asia to $18.2 billion.
The number of $1 billion-plus megadeals fell to two in Q1 2022, Altos Labs and Checkout.com, both of which closed in the first three weeks of the quarter before the Ukraine crisis began. Altos Labs raised $3 billion, and Checkout.com raised $1 billion. Companies from seven countries attracted the ten largest deals. Other notable rounds included Flexport ($935 million) and Ramp ($750 million) in the Americas, and Wefox ($871 million) and Getir ($768 million) in Europe. In Asia, Byju, JD Property, Changan New Energy Vehicles Technology and Swiggy each raised rounds of $700 million or more. Global first-time VC financing was soft at $12.6 billion.
Exit activity was the weakest component. Exit value fell more than 60% quarter-over-quarter, to $122.3 billion across 684 deals from $344.2 billion across 941 deals in Q4 2021, following a record year for exits. KPMG's Conor Moore, Head of KPMG Private Enterprise in the Americas, said turbulent capital markets had "effectively slammed the door shut on most IPO activity for the moment" and that IPO activity would likely remain soft heading into Q2 2022.
Looking ahead, KPMG expects VC investment to remain relatively stable in Q2 2022, supported by significant dry powder. Jonathan Lavender, Global Head of KPMG Private Enterprise, said caution would likely guide investors, who are expected to favor late-stage companies and proven bets. That posture could pressure startups seeking first-time or early-stage financing. Lavender added that it was too early to assess the full effect of the Russia-Ukraine war on the broader VC market, noting that the large volume of capital raised by VC funds in recent quarters would seek deployment.
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