Money Is Still Gushing for Venture Capital Firms

(Bloomberg) -- The U.S. venture industry raised $73.8 billion last quarter, more money than in any other previously announced three-month period and more than the total for most full years.

The data, gathered by research firm PitchBook and the National Venture Capital Association, show that venture capitalists still have plenty of cash to keep bankrolling startups. That vote of confidence comes despite a shrinking market for initial public offerings, rising inflation and a war.

Those challenges could be the reason why venture capitalists also seem to be parting with the cash more slowly than in 2021. In the first quarter of 2022 they spent $70.7 billion, funding 3,723 startup deals, according to PitchBook. That’s a higher tally than in almost any other quarter over the past two decades, but not compared with last year, which was an unusually rich one. VCs spent $77 billion on 4,282 deals in the first quarter of 2021. And in the last three months of that year, they spent $95.4 billion on 4,098 deals.

Exit activity, meaning initial public offerings or a startup’s sale to another business, fell this year alongside market conditions. The first quarter saw $33.6 billion across 310 exit deals, down from $124.6 billion across 393 deals a year earlier.

Some of the big fundraising hauls this past quarter include $9 billion in financing for Silicon Valley’s Andreessen Horowitz, and $1.15 billion raised by Ribbit Capital. Both announcements came in the first week of the year, indicating most of the fundraising was actually completed toward the end of 2021. With the economy wobbling as 2021 drew to a close, some venture firms may have pulled forward fundraisings they had originally planned for later in 2022.

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