HomeInsightsResearchQuarterly UpdatesVenture Capital Q2 2022

In this report:

Tougher exit environment

Impact of inflation

Fewer deals, falling valuations

Venture debt to gain traction

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Preqin Quarterly Update: Private Equity Q2 2022

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Venture Capital Q2 2022

July 12, 2022

Summary

Venture capital remains the asset class causing us most concern amid the current market turmoil. So far activity in the industry is holding up comparatively well, but it remains to be seen how much of that was already in the pipeline. Our outlook is for slower deal activity going forward as the market begins to adjust to lower valuations.

Kebelyn Lee, MBA

AVP, Research Insights

Tougher exit environment expected to lead to longer hold periods

Venture capital is gearing up for a cold spell as portfolio companies' growth and fundraising are slowing. Concerns over start-ups’ high burn rate and limited exit options caused by a global equity sell-off have extended funds’ holding periods and slowed capital distribution. This has the knock-on effect of weakening fundraising, and we should expect a more pronounced slowdown in H2 2022.

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We'll be taking a break from publishing our Preqin Quarterly Updates in Q3 2022, but you'll be able to read our full analysis of developments and opportunities in each asset class up to the third quarter in our 2022 Global Annual Reports. Look out for them in December 2022.

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In an ever-changing economic environment, private capital markets reflect the impacts of global political changes, government and regulatory scrutiny, technological advances, public opinion, and consumer behavior. Fund managers, investors and those working with them need to adapt - and fast.

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