PitchBook News - VC data reveals distress

For every dollar expected to be sought, there are now just six dollars available for each stage. In 2021, this ratio reached double digits.

The question of where the capital has gone is important context.

The dollar declines seem to have largely come from crossover and other nontraditional investors, exacerbating the challenges for companies that had ridden the wave of extending multiples into high valuations that will be unsupported in today's environment.

Deal value derived from financings with crossover investor involvement fell to under $12 billion in Q3, $33 billion lower than the highest quarter.

Just $20 billion in mega-deals were completed in Q3—well below the record $54 billion. Roughly 90% of these transactions include nontraditional investors, such as large crossover institutions with much larger capital bases than VCs.

These drops almost fully cover the deficit the market is seeing, even if these investors aren't the sole culprits of the industry's broader decline.

Adding to the riddle, median deal sizes and valuations for seed and early-stage companies have been relatively unaffected in the data so far, even increasing above 2021 levels on an annualized basis.

These areas of the market are receiving the benefits of the high amount of dry powder and high number of recently closed funds that the late-stage companies—especially unicorns—aren't likely to see.

For more data and analysis, click to download the free Q3 PitchBook-NVCA Venture Monitor.