Qubit: NVCA Yearbook 2023
The NVCA published their annual report this year with a section on what is venture capital and how it works.
The rest of the report also shares that in 2022 there was:
$238 billion deployed in deals
$163 billion raised across 784 funds
$315 billion in dry powder
But exit values dropped 90%
It was a most unusual year.
“The Economic Impact of Venture Capital: Evidence from Public Companies analyzed the impact venture-backed companies had on the economy between 1978 and 2020. The study found that of the 1,677 US companies that went public in that period, 834 (or 50%) were venture- backed. These 834 companies represent 77% of the total market capitalization on public markets, 92% of national research and development expenditure, and 81% of total patents granted by the US Patent and Trademark Office.
By the end of 2022, VC-backed companies accounted for the seven largest publicly traded companies by market capitalization in the US: Apple ($2.2 trillion), Microsoft ($1.9 trillion), Alphabet ($1.2 trillion), Amazon ($856.9 billion), Tesla ($389.0 billion), Meta ($315.6 billion), and NVIDIA ($612.2 billion).”
“While Q1 2022 mirrored the heights of 2021, Q4 2022 approximated the less lofty days of 2018. Quarterly deal count and overall value counts fell to levels roughly commensurate with the late 2010s. Exits plunged to the lowest levels in over a decade, and public listings slowed to almost nonexistent levels—just 14 occurred in Q4 and 76 over the entire year. While the drop in activity was worrisome, investors were quick to fortify themselves against a tighter market with aggressive fundraising. 2022 saw the most fundraising in modern VC history, with nearly $163 billion raised across 784 funds. When combined with overhanging funds from prior years, the industry has just under $315 billion in dry powder to invest, with 75% of that capital sitting in funds of at least $250 million.”
“Exits come in a variety of forms including public listings, acquisitions, and SPACs as a result of positions that are liquidated, and funds either returned to GPs and LPs or reinvested in future funds. After a blockbuster 2021, overall disclosed exit values in 2022 were down by over 90%, and the number of disclosed exit transactions dropped by 36%. Across most of the other types of transactions, the US share remained flat from 2021 to 2022. However, from 2021 to 2022, the US’ share of disclosed global exit value dropped by 57%, the lowest share in at least 20 years.”
Source:
NVCA 2023 Yearbook: U.S. VC Fundraising Reaches New Heights Amid Industry Challenges
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