Venture capital investment slumps again in torrid year

The US led overall investment with $36.2bn, followed by Asia at $22.6bn. Europe was hardest hit, with VC investment falling from $21.2bn to $12.9bn in Q4.

Global investment fell to its lowest levels since Q2 2019.

Looking ahead to the first quarter of this year, KPMG said that VC investment globally is expected “to remain subdued”, with consumer-focused businesses seeing the most strain.

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The IPO window, particularly in the US, is expected to remain shut in the months ahead, with little to suggest it will reopen fully in the first half of the year.

“Globally, we continue to see downward pressure on valuations in early 2023, leading many companies to postpone fundraising efforts in hopes of better times ahead,” said Jonathan Lavender, global head of KPMG private enterprise.

“However, these companies can only hold off so long and we anticipate an increase in down-rounds during the first half of 2023 as companies begin to exhaust cash reserves.”

The latest sign of trouble in the VC market comes in spite of large deals being inked in the energy sector, including alternative energy vehicles, battery technologies, and alternative power generation and distribution technologies.

The US recorded the largest proportion of investment in the final quarter of last year, with Asia second, despite attracting three $500m-plus megadeals across the quarter.

This article was published by Financial News sister title Private Equity News

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