Accel’s Deal Size Shrinks As Venture Market Pullback Continues

Known for its early investments in companies like Meta, Slack and Atlassian, Accel owns its reputation for  placing big bets on transformational technologies and innovation.

However, while Accel’s recent dealmaking has been consistent, the total dollar amounts of those investments seems to illustrate the bumpiness in venture funding today, according to Crunchbase data.

In the second quarter of last year—when the fundraising market was at its height—the Palo Alto-based venture firm did not shy away from the action. It participated in 62 rounds that piled up $6.6 billion in total money raised.

The third quarter of 2021 was also productive with the firm participating in 53 rounds that totaled $5.6 billion. In those two quarters alone—venture capital’s heyday—Accel participated in 115 rounds totaling more than $12.3 billion.

However, while deal count remained high in the final quarter of the year—when many now report first seeing softness—deal size started to drop.

The first quarter saw an uptick in those numbers, significantly helped by a huge $1.25 billion venture round in January to India-based food delivery service Swiggy. But the current quarter is trending to be the firm’s lowest in both deals and size of deals since the first quarter of last year.

Large rounds

In fact, the Swiggy round—in which 10 investment firms participated, according to Crunchbase— was the only round from this calendar year that cracked the five largest rounds Accel has participated in since the beginning of 2021.

The other rounds include:

• Participating in a $900 million Series C for Germany-based crypto startup Trade Republic in May 2021;
• Participating in an $800 million Series J for Swiggy in April 2021;
• Participating in an $800 million Series C for Amsterdam-based cloud communications company MessageBird in April 2021; and
• Participating in a $680 million Series B for Paris-based fantasy sports startup Sorare last September.

While Accel’s investment cadence remains pretty steady, its deal size does seem to illustrate the softening of the venture market with tech valuations coming off their all-time highs as the economy stutters along. The drop in round size does seem to coincide with the pullback the private market has seen starting late last year, according to many.

Big money

None of that is to say Accel is not equipped for when the market bounces back or if the right large round opportunity presents itself. Known as a firm that looks to be the first investor in on the seed and Series A rounds of startups it vets, Accel announced earlier this week the close of a $4 billion global, later-stage fund to allow it to provide capital to both companies already in its portfolio and new investments.

While Accel declined comment for this story, in its blog post about the fund it took note of the changing investment environment, saying its “decades-long experience has also taught us the importance of patience and discipline—especially during periods of volatility and change like we are experiencing today.”

If Accel is slowing, it is not alone. SoftBank’s pullback has been much discussed, and firms such as Y Combinator, Sequoia Capital and Tiger Global all have issued warnings either publicly or privately

Methodology

The total dollar amount of rounds the firm participated in reflects the total investment in those rounds, not the particular firm’s stake in those rounds—which is normally not released. All numbers relating to deals and deal size are from Crunchbase data.

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Illustration: Dom Guzman