Every year around this time, private equity data provider Pitchbook releases its accounting of venture capital activity. This year’s report offers an interesting view into what happened in the venture capital world in 2022 compared to its recent history and what might be on the docket for 2023. Here’s a review.

Overall Deal Count

The first view is of overall deal count. In the following graphic, the red dots represent estimated deal count (right axis). Overall, deal counts declined each quarter over the course of 2022. Total deals went from a little over 5,000 in the first quarter to about 4,000 in the fourth quarter, for total estimated deals of 15,582. The 15,582 represents a drop of around 3,000 deals from the 2021 watermark of 18,521. Although having declined, activity over the course of 2022 was still strong by historical counts, with the 15,582 being the second highest on record.

Switching to deal value, deal value in 2022 also declined continually from the first quarter to the fourth quarter. On the whole, deal value reached $238 billion in 2022, a heavy decline from the $345 billion in 2021. As with the number of deals, although the 2022 figures were less than 2021, overall deal value was still much stronger than any prior year, with the next closest – 2020 – at about $171 billion.

Source: Pitchbook

The Late-stage Picture is Still Good

Moving to late-stage activity, overall activity in the latter half of 2022 was the friendliest since 2018 for investors. This represented a marked rise from the incredibly startup friendly 2021 year. If the current trend continues, the 2023 year may be one of the most investor friendly years on record.

Source: Pitchbook

Angel and Seed Activity

One of the main factors behind the slowing activity stems from the angel and seed stage picture. As shown below, angel and seed activity precipitously slumped over 2022. In the first quarter of 2022, the number of estimated deals stood at around 2,200, its all-time high. By the end of 2022, the number of deals had declined to about 1,500. Although having dropped throughout the year, the angel and seed deal value reached its all-time high of around $22 billion in 2022, beating 2021’s approximately $20 billion and far ahead of anything seen in the prior decade. Even though activity will likely continue to slow in 2023, activity will likely continue to be reasonably healthy in 2023 relative to what we’ve seen over the past 20 years.

Source: Pitchbook

Summing Up

Overall, although venture capital activity was weaker in 2022 compared to 2021, overall activity continues to be in healthy conditions, with overall activity back to pre-COVID levels. If activity continues its current trend, overall activity in 2023 will be on a healthy cruising altitude – not too hot, not too cold.