Venture capital slowed in Q2 (but it’s evolving)

And Europe is holding up better than you may expect

As the global venture capital market slows, it’s also evolving. In the second quarter of 2022, global venture totals dipped, but inside of that slowdown is a shift away from the super-late-stage deals that helped push the value of VC deal-making to all-time highs last year.

And we’re seeing regional differences that could indicate that some startup markets are set to better endure the ongoing decline in venture totals. Leaning on a new global and regional venture report from CB Insights, we’re tearing into the location-based changes to the VC game today.

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Why start with a geographic look at the venture capital market instead of, say, stages? Or business focus, like financial technology or enterprise software? Because we want to start from the very highest level, and then focus on startup groups by maturity and niche. We’re nowhere near “settled” in this new reality, which means that the numbers are more fluid — and more surprising. Into the data!

The world

As expected, global venture totals fell last quarter. According to CB Insights data, some $108.5 billion was raised last quarter by startups across 7,651 deals. Yes, that’s a lot of money and a great number of deals, but both figures are the smallest since the end of 2020, meaning that we’re coming off an even hotter period for startup deal-making.

For context, the global venture market’s value peaked in Q4 2021, according to the same dataset, when some 9,116 deals powered $177.8 billion worth of deal-making. From those levels, we’re off 39% from the peak in dollar terms, and around 20% from the Q3 2021 deal volume local maximum (9,622 rounds, which slipped modestly in the fourth quarter of last year).

Not as bad as you anticipated? That’s our impression sitting here today. Given the sheer volume of complaints that we’ve seen in venture capital-startup conversations concerning fundraising, you’d think that we are off more like 50% from recent peaks. In reality, Q2 2022 was down from recent highs, and down compared to Q1 2022, but in any year prior to 2021, it would’ve been a standout, at least from a global perspective — this does not mean that all things are healthy, or that venture capital is getting more diverse in its targets.

As a group, startups today are still enjoying historically elevated venture capital deal-making and dollar value, just not quite what we saw, in global terms, last year. (That said, if declines continue, we could drop back to 2020 levels as soon as the present quarter.)

We’ll look at unicorns and mega-rounds tomorrow to better get our hands around the later stages and how they compare to earlier steps in the startup ladder. Today, we’re spinning the globe and checking in everywhere.

Largest VC regions: A contrasted picture

Global figures often hide regional discrepancies, and that was the case last quarter. Looking at some regions, such as Europe and Africa, you may be wondering what downturn we keep banging on about. But all over the world, there are still signs that we are not in the same market as mere months ago. Let’s take a look at CB Insights’ regional data:


When comparing Q2 2022 to the first three months of the year, Europe-based startups only saw a 13% quarter-on-quarter decline in total funding, from $26.2 billion to $22.7 billion. According to CB Insights, that’s the “smallest dip” among major VC regions. And putting things into perspective, it is still a lot more funding than in every pre-2021 quarter on record.

By this point, it is hard to think that data is misleading, only reflecting delayed disclosure of funding rounds that closed in 2021, as might have happened in the first weeks of 2022. Instead, the most likely explanation for Europe holding up better than Asia and the U.S. is its large share of early-stage deals, which represent two out of every three deals.

Does the data warrant extra optimism for European startups’ ability to raise funding? Looking at 2022 so far, you might expect total funding to best 2021’s tallies: The $48.9 billion amount raised in the first half of 2022 is already more than half of the 2021 total. However, assuming the future will resemble the past is a rookie mistake when it comes to investing — and the U.S. might serve as a warning that 2022 won’t resemble 2021.

North America

That venture capital deployment is slowing down compared to 2021 is a reality in the U.S, where startups collectively raised $52.9 billion in Q2 2022. That’s 25% less than in the first quarter of the year — $70.1 billion — and, more generally, less than in any quarter since the end of 2020. Deal volume is also down 20%, with 2,698 deals last quarter compared to 3,381 in Q1 2022.

Likewise in Canada, dollar volume and deal volume are down compared to Q1 2022. That quarter was a bit of an outlier, with $4 billion being raised across 224 deals — closely aligned with the record Q2 2021 totals of $2.9 billion raised across 219 deals. But Q2 2022’s tallies were also below any quarter in 2021 — although still much higher than in previous years.

In other words: Despite a decline, funding in Canada and the U.S. hasn’t returned to pre-2021 levels — at least not yet.


In Asia, venture capital funding in Q2 2022 was back at levels it already reached in some quarters of 2020. The decline that started in Q1 2022 continued, with $27 billion raised by startups, compared to $35.8 billion in Q1 2022 and $55.4 billion in Q4 2021.

Unlike in Europe, this decline happened despite the fact that two out of every three funding rounds in Asia are raised by early-stage companies. Their valuations are supposedly less affected by the comparison with public market caps than their late-stage counterparts, but in Asia, it didn’t help — median early-stage valuation dipped to $25 million from $30 million in the previous quarter.


As we mentioned, it can be dangerous to make deductions based on the past, no matter how recent. But it is still interesting to note that “Africa funding is on pace to hit a new annual record.” According to CB Insights, venture capital raised in the first half of 2022 already reached 71% of the total amount raised in 2021, which was a record year by far.

CB Insights’ tally for Q2 is $1.7 billion, which is also close to a $1.1 billion estimate from one of our recurring sources about Africa, Briter Bridges. And for another of our sources, The Big Deal, which takes a less conservative view of what constitutes an African startup, the tally for 2022 so far could even be above $3 billion.

Latin America

Based on Africa’s surprising but encouraging results, you may start to wonder if emerging markets were spared. But a quick look at Latin America will remind you that after a blowout 2021, it’s correction time for VC activity in the region.

In line with what we expected after talking to VCs and startups in Latin America, funding was down in Q2 2022 compared to every quarter since Q1 2021. The quarter-on-quarter decline was relatively small — 23%, from $3 billion to $2.3 billion. But perhaps only because the tide had started to turn in Q4 2021, earlier than in some other regions.

Lag, again?

There’s a chance that the above numbers are more rosy than accurate. Not that the data collectors of the venture world are wrong; CB Insights, PitchBook, Crunchbase and the others tend to land pretty close to one another and always directionally agree. Instead, we wonder if the actual performance of the venture market in Q2 2022 was still somewhat impacted by prior momentum. Are we seeing the real state of affairs?

We asked a similar question after Q1 2022, and what the second quarter brought us was more of the same — declines and slowdowns. If Q3 2022 winds up telling a similar story, we’ll better understand market concerns that the slowdown is going to take a bite out of startup fundraising.

Surprised that change isn’t happening more quickly? Recall that the early-2020 shuttering of the venture capital industry was brought on by what felt like a snap recession. The input changes were more instant, more negative and more surprising. That made the changes to investment cadences all the more rapid. Today, the inputs are changing more slowly and are better presaged. So it makes sense that the response is slower, in terms of the pace at which the venture capital market is slowing.

Perhaps the question isn’t whether Q2 2022 is a truly fair look at the state of the VC and startup game. Maybe it’s when do we hit bottom? And when we do, what will those local minimum figures look like? Are we heading back to 2020 venture capital levels or 2018? That could be the most important question for startups moving forward. And no one knows the answer. Not yet, at least.