The Exchange’s Weekend Missive: A Global Perspective
Hello and welcome back to The Exchange’s weekend missive! If you’re reading this on TechCrunch and want to get the letter in your inbox, click here. Your regular host, Anna Heim, is off this week on a much-deserved vacation, so I’m stepping back into my old role as newsletter scribe. It’s good fun to write this note, frankly, so thanks for having me.
The Good News: Venture Capital in the United States
In the United States, venture capital activity is holding up better than we anticipated. That’s good news, perhaps even better than expected. Venture interest in software startups is looking downright robust. This matters because most startups are software companies; if software startups are healthy, then upstart tech companies in general are doing OK. And given the United States’ weighty influence on startups overall, then startups must be OK everywhere, right?
Not quite. While the U.S. venture capital market is the biggest in the game, the global startup industry is so large and distributed now that a healthy heartbeat doesn’t mean there aren’t problems elsewhere.
Looking Abroad: A Global Perspective
To better understand if the good news from the United States is holding up elsewhere, let’s take a look at some general figures. We’re broadening our lens to get a more global perspective on the venture capital market.
Global Numbers
Crunchbase News has some data that sheds light on the global venture capital market. Here are the numbers for Q3 2022 compared to Q2 2022 and year-ago totals:
- Seed/Angel: $7.4 billion in Q3 2022, $9.7 billion in Q2 2022, $7.9 billion in Q3 2021
- Early Stage: $33.8 billion in Q3 2022, $45.2 billion in Q2 2022, $55.6 billion in Q3 2021
- Late Stage: $39.9 billion in Q3 2022, $66.9 billion in Q2 2022, $108.4 billion in Q3 2021
The seed data is not bad, and you could even argue that it’s somewhat strong. Nearly matching a 2021 figure in 2022 is solid. However, from there the news gets worse.
The Bad News: A Global Perspective
Early-stage capital on a global basis is slowing rapidly, and the picture is even less salubrious for late-stage startups around the world.
Why the Better-Than-Expected U.S. Data is Actually Bad News
The better-than-expected U.S. Q3 venture capital data is actually bad news in this context because if the United States is doing well and global futures are down, then the rest of world figures must be under even more pressure than we might glean from simply observing.
A Global Perspective: Implications for Startups
The implications of these numbers are clear: startups will find it harder to raise money, regardless of their location. This is not just a U.S. issue; it’s a global problem.
What Does This Mean for Startups?
Startups will need to be more creative and strategic in their fundraising efforts. They’ll need to think outside the box and consider non-traditional funding options. The days of relying solely on venture capital are coming to an end.
Conclusion
The exchange rate between startup success and venture capital investment is becoming increasingly complex. As the global startup industry continues to grow and mature, we can expect more emphasis on alternative funding sources and non-traditional business models.
Stay tuned for more updates from The Exchange’s weekend missive!
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