Q3

2022

US
VC Valuations
Report

Sponsored by
 Sponsored by

Contents
Key takeaways 4 PitchBook Data, Inc.
John Gabbert Founder, CEO
Angel and seed 5
Nizar Tarhuni Senior Director, Institutional Research & Editorial
Early-stage VC valuations 7
Dylan Cox, CFA Head of Private Markets Research

Late-stage VC valuations 9

Institutional Research Group

Biotech & pharma 11
Analysis
Fintech 12
Kyle Stanford, CAIA
Enterprise tech 13 Senior Analyst, US Venture Lead
[email protected]

Consumer tech 14

Nontraditional investors 15 Data

Susan Hu
Liquidity 17 Data Analyst

Timothy Cheng
Deal terms 19 Associate Quantitative Research Analyst

[email protected]

Publishing
Report designed by Joey Schaffer

Published on November 7, 2022

Click here for PitchBook’s report methodologies.

2 Q3 2022 US VC VALUATIONS REPORT

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Key takeaways
Both the median and average late-stage VC valuations have For all the turmoil at the latest stages of VC, seed and
taken a significant hit in 2022, a quick fall after the rapid early-stage valuations have remained at the elevated levels
rise seen in 2021. Public market multiples have compressed, achieved in 2021. In Q3, the median pre-money valuation for
causing the extended valuations garnered in 2021 to be seed deals reached $10.0 million, while the median early-
exposed to a less welcoming market from equity investors. stage valuation came in at $45.0 million. Though there has
The shortage of capital is being exacerbated by the retreat been a slowdown in deal count at these stages, momentum
of crossover investors and large nontraditional investors from the market growth in recent years continues. The record
that have flooded VC in recent years. The largest deals in number of closed funds and the high amount of dry powder
the market have been heavily reliant on capital from these are likely to help seed and early-stage venture much more
investors, and now that there is less capital available, the than late-stage venture, as a high number of investors remain
unicorn market has all but disappeared this year. in their new investment period.

The backup at the late stage is being further impacted

by the inability of companies to exit. The trapped value at
the top of the market is at risk, as more than 1,200 unicorns
operate globally. While exit valuation step-ups have remained
relatively strong, there has been a severe lack of exit value
generated. The average public listing valuation has remained
above $1 billion, but the median valuation has declined to just
$317.2 million, the lowest figure in three years.

4 Q3 2022 US VC VALUATIONS REPORT KEY TAKEAWAYS

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Angel and seed

Angel deal values largely unchanged Seed deal values continue to rise
Angel deal value ($M) dispersion Seed deal value ($M) dispersion

$1.6 $9

$1.4 $8
$7
$1.2
$6
$1.0
$5
$0.8
$4
$0.6
$3
$0.4 $2
$0.2 $1

$0.0 $0

2021
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

2012

2013

2014

2015

2016

2017

2018

2019

2020

2022*
Top and bottom quartile range Median Average Top and bottom quartile range Median Average
Top decile Bottom decile Top decile Bottom decile
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Seed investment continued to show its strength after several Median seed pre-money valuation at $10.5
quarters of slowing deal activity in the broader venture million in 2022
industry. The median pre-money valuation for seed deals Seed pre-money valuation ($M) dispersion
remained at $10 million, marking the fourth consecutive
$35
quarter of a double-digit median. The seed stage has
benefited from significant fundraising by small funds over $30
the past few years. More than $73 billion in dry powder
was available in funds under $250 million as of June 30, $25
2022, a high amount of capital largely focused on the earlier
$20
stages of venture. Larger funds and nontraditional investors
have also continued to invest heavily at the seed stage in
$15
recent quarters, pushing even more capital into the stage.
Nontraditional investors participated in nearly $2 billion in $10
seed deal value in Q3, marking the fourth consecutive quarter
of this data point surpassing $1.8 billion. Nontraditional $5
investor participation at the seed stage has set a new annual
$0
record of $6.7 billion in total deal value through Q3.
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

The longer economic woes extend, the greater the chance Top and bottom quartile range Median Average
that the slowdown in VC increases the pressures on seed Top decile Bottom decile
investments and valuations. Even at their heightened level,
Source: PitchBook | Geography: US
*As of September 30, 2022

5 Q3 2022 US VC VALUATIONS REPORT ANGEL AND SEED

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Median share acquired in seed deals dips

Seed share acquired dispersion by quarter

50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020 2021 2022*

Top and bottom quartile range Median Average Top decile Bottom decile
Source: PitchBook | Geography: US
*As of September 30, 2022

pre-money valuations have plateaued, while top-quartile and 49% of completed seed deals in Q3. The seed pre-money
top-decile valuations have slowly pulled back. Diving deeper valuation outside of those four major hubs has grown even
into the data, the growth of seed valuations hasn’t been tied more in 2022, increasing by around 33% from the full-year
to the growth of the statistic in the Bay Area, New York, Los 2021 data point. For the time being, the broader reach of
Angeles, and Boston regions, which accounted for roughly venture has sustained the economic slowdown.

Median step-up rises QoQ

Median and average seed valuation step-up by quarter

3.5x

3.0x

2.5x

2.0x

1.5x

1.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020 2021 2022*

Median Average
Source: PitchBook | Geography: US
*As of September 30, 2022

6 Q3 2022 US VC VALUATIONS REPORT ANGEL AND SEED

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Early-stage VC valuations
Early-stage deal values defy market narrative Early-stage valuations slide QoQ yet stay above
Early-stage VC deal value ($M) dispersion 2021 YoY
Early-stage VC pre-money valuation ($M) dispersion

$60 $300

$50 $250

$40 $200

$30 $150

$20 $100

$10 $50

$0 $0
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013

Top and bottom quartile range Median Average Top and bottom quartile range Median Average
Top decile Bottom decile Top decile Bottom decile
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Early-stage VC has seen valuations decline a bit more than Early-stage valuation step-ups have also begun to show
seed, yet median valuations continue to be much higher than signs of a strong slowdown. In Q3, the median early-stage
figures seen prior to 2021. For context, the Q3 median pre- valuation step-up dropped to just 2.4x, down from 3.3x in Q1.
money valuation for early-stage deals was $45.0 million, a The rolling four-quarter average step-up also decreased to its
steep decline from the $60.0 million median in Q1 but still lowest level since Q2 2021. As more investors piled into the
50.0% higher than the highest quarterly figure prior to last early stage and revenue multiples extended in both public
year. These disparities continue to paint a complicated picture and private markets, 2021 figures increased accordingly.
of the venture slowdown. On one hand, it’s easy to see a These elevated valuation jumps have pressured companies
major decline, but on the other, the venture market still looks to keep up the pace, but they also leave them exposed to
stronger than it did any time before 2021. The top quartile potential down rounds. To combat this market weakness,
valuation for the early stage also still remains double that of many companies have likely opened prior rounds to add more
two years ago, an increase that seems unsustainable for the capital without fully re-entering the equity raising market in a
long term. weakened economic climate.

7 Q3 2022 US VC VALUATIONS REPORT EARLY-STAGE VC VALUATIONS

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Early-stage step-ups trending lower

Median and average early-stage VC valuation step-ups by quarter

8x

7x

6x

5x

4x

3x

2x

1x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018 2019 2020 2021 2022*
Median Average
Source: PitchBook | Geography: US
*As of September 30, 2022

Early-stage companies continue creating more value RVVC highest on record

Median early-stage VVC ($M) between rounds Median early-stage RVVC between rounds

$48.8 160%
$50
146.2%

$43.1 140% 135.9%

$40 120%

100%
$30
80%

$20 60%

40%
$10
20%

$0 0%
2012

2013

2014

2015

2022*

2012

2018

2019

2021
2016

2017

2018

2019

2021

2020

2022*
2020

2013

2014

2015

2016

2017

Source: PitchBook | Geography: US Source: PitchBook | Geography: US

*As of September 30, 2022 *As of September 30, 2022

8 Q3 2022 US VC VALUATIONS REPORT EARLY-STAGE VC VALUATIONS

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Late-stage VC valuations
Late-stage deal values slow significantly Late-stage valuations can’t keep pace with 2021
Late-stage VC deal value ($M) dispersion Late-stage VC pre-money valuation ($M) dispersion

$140 $1,600

$1,400
$120
$1,200
$100
$1,000
$80
$800
$60
$600
$40
$400

$20 $200

$0 $0
2020

2022*
2014

2018

2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*
2016

2019

2021
2017
2012

2015
2013

Top and bottom quartile range Median Average Top and bottom quartile range Median Average
Top decile Bottom decile Top decile Bottom decile
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

The late stage of venture has seen the impacts of volatility The median late-stage valuation in Q3 fell to $71.0 million, a
more than any other area of the market so far. Deal value at 29.0% drop from Q1. Rather than highlighting that valuations
the stage fell to an 11-quarter low in Q3, notching just $24.9 are simply falling, we believe the decline is also due to the
billion, nearly $40 billion less than the quarterly high of Q3 top of the market all but disappearing. Crossover deal value
2021. Late-stage deal counts have also declined significantly— participation in Q3 was 73.8% lower than the record high of
down more than 20% from Q1 2022—though remain well $44.7 billion in Q3 2021, showcasing an extreme decrease in
above figures seen prior to the COVID-19 pandemic. Our the amount of capital available at the latest stages of VC. In
data estimates that more capital is expected to be sought at Q3, just 68 late-stage mega-deals were closed, which was 59
the late stage this year than ever before, yet the availability fewer than Q2 and 89 fewer than Q1. The top-decile late-stage
from investors, especially large nontraditional institutions, valuation from Q3 was just 46.0% of the high-water mark set
seems likely to leave a large gap between the numbers. in Q3 2021, which topped out at $1.5 billion. Unsurprisingly,
Nontraditional firms participated in more than $200 billion of the median relative velocity of value creation (RVVC) and
late-stage financings in 2021; the capital crunch in the current velocity of value creation (VVC) calculations have fallen for
market can easily be tied to the dearth of investment from late-stage VC, the only stage to see a drop.
these institutions.

9 Q3 2022 US VC VALUATIONS REPORT LATE-STAGE VC VALUATIONS

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Median step-up lowest in six quarters

Median and average late-stage VC valuation step-ups by quarter

4.5x

4.0x

3.5x

3.0x

2.5x

2.0x

1.5x

1.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020 2021 2022*

Median Average
Source: PitchBook | Geography: US
*As of September 30, 2022

Late-stage VVC sees notable decline RVVC declines at late stage only
Median late-stage VVC ($M) between rounds Median late-stage RVVC between rounds

$60 80%
$53.7 69.2%
70%
$50
58.9%
$42.9 60%
$40
50%

$30 40%

30%
$20
20%

$10
10%

$0 0%
2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

Source: PitchBook | Geography: US Source: PitchBook | Geography: US

*As of September 30, 2022 *As of September 30, 2022

10 Q3 2022 US VC VALUATIONS REPORT LATE-STAGE VC VALUATIONS

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Biotech & pharma

Median early-stage VC deal value continues Late-stage biotech valuations struggle
trend reversal Median biotech & pharma VC pre-money valuation ($M) by stage
Median biotech & pharma VC deal value ($M) by stage
$40 $90 $85.0

$35 $33.5 $80

$65.0
$30 $70 $61.0

$24.3 $60
$25
$50 $45.0
$20 $17.4
$40
$15 $12.7
$30
$10 $20.0
$20 $15.0
$5 $2.9 $3.6 $10.0
$10
$0.4 $0.3 $10.0
$0 $0
2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2020
2022*

2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*
Angel Seed Early-stage VC Late-stage VC Angel Seed Early-stage VC Late-stage VC
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Biotech shares up in 2022 Step-ups remain elevated

Median VC share acquired in biotech & pharma companies by stage Median biotech & pharma VC valuation step-ups by stage
45% 3.0x
39.3%
40% 35.7%
35% 32.4%
30.7% 2.5x
30%
26.5%
25% 23.6%
2.0x
20%

15%
1.5x
10%

5%

0% 1.0x
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*
2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*

Seed Early-stage VC Late-stage VC Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

11 Q3 2022 US VC VALUATIONS REPORT BIOTECH & PHARMA

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Fintech
Late-stage deal values dip 2022 late-stage fintech valuation down 26.5% YoY
Median fintech VC deal value ($M) by stage Median fintech VC pre-money valuation ($M) by stage

$30 $250 $245.0

$27.1

$25
$21.6 $200 $180.0

$20
$150
$15
$10.5 $100
$10.1 $72.2
$10
$60.0
$50
$5 $3.7
$3.0 $13.5
$10.0
$0
$0

2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*
2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*

Seed Early-stage VC Late-stage VC Seed Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Fintech shares down in 2022 Step-ups undeterred by public sell-off in fintech

Median VC share acquired in fintech companies by stage Median fintech VC valuation step-ups by stage

30% 4.0x
27.2% 26.8%

25% 3.5x

20.0% 20.0%
20% 3.0x

15.3%
15% 13.9% 2.5x

10% 2.0x

5% 1.5x

0% 1.0x
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013

Seed Early-stage VC Late-stage VC Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

12 Q3 2022 US VC VALUATIONS REPORT FINTECH

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Enterprise tech
Late-stage deal sizes much lower than in 2021 Early-stage valuations chug higher
Median enterprise tech VC deal value ($M) by stage Median enterprise tech VC pre-money valuation ($M) by stage

$20 $140
$18.7
$120.0
$18 $120
$105.0
$16
$100
$14 $13.3

$12 $80
$10.0 $12.0 $60.0
$10
$60
$47.2
$8
$40
$6
$11.1
$4 $3.0 $9.5
$2.5 $20 $6.0 $3.4
$2 $0.4
$0.3 $0
$0

2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*
2020
2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*

Angel Seed Early-stage VC Late-stage VC Angel Seed Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Late-stage investors are taking larger shares Late-stage step-ups still above 2x
Median VC share acquired in enterprise tech companies by stage Median enterprise tech VC valuation step-ups by stage

30% 28.2% 26.9% 4.0x

25% 22.4% 22.0% 3.5x

20% 3.0x
16.3% 17.2%

15% 16.6% 2.5x

10.0%
10% 2.0x

5% 1.5x

0% 1.0x
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013

2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

Angel Seed Early-stage VC Late-stage VC Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

13 Q3 2022 US VC VALUATIONS REPORT ENTERPRISE TECH

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Consumer tech
Early- and late-stage median deal sizes Late-stage valuations lay flat
are converging Median consumer tech VC pre-money valuation ($M) by stage
Median consumer tech VC deal value ($M) by stage

$16 $120 $112.0 $110.0

$14.0
$14
$100
$12
$10.3
$80
$10
$8.0
$8 $7.3 $60 $55.0

$6 $40.0
$40
$4 $2.5 $10.8
$2.3 $20 $8.5 $6.5
$2 $3.1
$0.3 $0.3
$0 $0

2020
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013
2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013

Angel Seed Early-stage VC Late-stage VC Angel Seed Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Share acquisitions plateau at early stage Early-stage step-ups increase YoY

Median VC share acquired in consumer tech companies by stage Median consumer tech VC valuation step-ups by stage

30% 3.0x
26.4%
24.2%
25% 21.7%
21.6% 2.5x
20%
16.7% 17.9%

15% 14.0% 2.0x

15.0%
10%
1.5x
5%

0% 1.0x
2020
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2022*

2013
2014

2018
2016

2019

2021
2017
2012

2015
2013

Angel Seed Early-stage VC Late-stage VC Early-stage VC Late-stage VC

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

14 Q3 2022 US VC VALUATIONS REPORT CONSUMER TECH

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Nontraditional investors
Early-stage NTI deal valuations still up Median late-stage valuations of NTI deals fall in
YoY 2022
Median early-stage pre-money valuation ($M) by investor type Median late-stage pre-money valuation ($M) by investor type

$80 $180 $170.0

$70.0
$70 $160 $150.0

$60 $55.0 $140

$120
$50 $42.0
$100
$40 $35.0
$80
$30
$60
$42.8
$20 $40.0
$40

$10 $20

$0 $0
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*
2020

2022*
2014

2018
2016

2019

2021
2017
2012

2015
2013

Nontraditional investor No nontraditional investor Nontraditional investor No nontraditional investor

Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Nontraditional investor participation data provides a good Corporate venture capital (CVC) has shown a somewhat
view into the trends occurring within VC valuations because different shift in strategy than the broader nontraditional
it shows the level of activity and deal value participation in investor group has. According to our Venture Monitor data,
the market from these institutions. Early-stage deals with corporate VCs remain involved in more than 25% of all VC
nontraditional investor participation continue to see the deals, which is in line with or higher than figures we have
median figure well above where it was in 2021, while at the seen in recent years. One factor that changes CVC trends is
late stage, the median valuation receiving nontraditional that much of CVC investment occurs at the seed and early
investor participation has fallen by $20.0 million. This again stage, two stages that have best weathered the downturn so
illustrates the slowing market at the late stage and the impact far. For both investments, the median and average valuations
that nontraditional investment has had on the venture market of deals with CVC involvement have continued to grow in
in recent years. In 2021, $271.6 billion in deal value was 2022. Early-stage deals with CVC participation have reached
generated through deals with these institutions, more than a median size of almost $19 million and a valuation of more
had been invested into the entire venture market any year than $70 million in 2021, YoY increases of 22.9% and 33.6%,
prior. Broadly, nontraditional investors have slowed activity respectively.
in both deal count and deal value in 2022, as quarterly deal
count has fallen more than 27% since Q1, and Q3 deal value
participation fell roughly $44 billion from the high in 2021.
This is a trend we expect to continue, especially since much
of the potential returns for this group remain locked in highly
valued companies facing a difficult path forward due to
economic conditions.

15 Q3 2022 US VC VALUATIONS REPORT NONTRADITIONAL INVESTORS

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Nontraditional investor activity falling quickly

US VC deal activity with nontraditional VC investor participation by quarter

$80 1,800

$70 1,600

$60 1,400

1,200
$50
1,000
$40
800
$30
600
$20 400
$10 200

$0 0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020 2021 2022*

Deal value ($B) Deal count
Source: PitchBook | Geography: US
*As of September 30, 2022

Median early-stage NTI deal value reaches $18M Top-decline late-stage deal has declines of 25% YoY
Early-stage VC deal value ($M) dispersion with nontraditional Late-stage VC deal value ($M) dispersion with nontraditional
investor participation investor participation
$400 $2,000

$350
$1,600
$300

$250
$1,200
$200

$150 $800

$100
$400
$50

$0 $0
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

Top and bottom quartile range Median Average Top and bottom quartile range Median Average
Top decile Bottom decile Top decile Bottom decile
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

16 Q3 2022 US VC VALUATIONS REPORT NONTRADITIONAL INVESTORS

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Liquidity
Public listing valuations take a hit in 2022 Spread in acquisition price has stayed
Valuation ($M) at exit via public listing dispersion by year relatively unchanged
Valuation ($M) at exit via acquisition dispersion by year

$4,500 $450

$4,000 $400
$3,500 $350
$3,000 $300
$2,500 $250
$2,000 $200
$1,500 $150
$1,000 $100
$500 $50
$0 $0

2020
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

2014

2018
2016

2019

2021
2017
2012

2015
2013

2022*
Top and bottom quartile range Median Average Top and bottom quartile range Median Average
Top decile Bottom decile Top decile Bottom decile
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

Unsurprisingly, VC exit valuations have suffered alongside the $6.0 billion larger than the rest of the Q3 exits generated in
slow market in 2022. The median public listing exit valuation value. The deal isn’t a precursor to increased exit activity, but
in 2022 declined to its lowest point in three years at $317.2 if closed, it will be a win for the VC market.
million, though the average has remained above $1 billion for
the fourth consecutive year. The huge tech exits that helped Valuation step-ups for exits have remained relatively strong,
2021 reach an unprecedented $781.5 billion in exit value have though that is little consolation for companies and investors
not been a part of the story in 2022. So far, just 171 public that haven’t been able to find an exit pathway. The more
listings, consisting of IPOs and deSPAC transactions, have concerning pieces of a slow exit market are the follow-on
been completed, far below the 585 completed during 2021. impacts, including low distributions to be recycled into the
The SPAC market, which became a major piece of the exit industry, and lagging performance from VC funds when they
market in 2020 and 2021, has fallen flat due to regulatory go back to the fundraising markets.
scrutiny, poor debt markets necessary for financing, and
lagging interest from investors. The poor post-completion
performance of companies after they deSPAC won’t help to
revive the market.

The lone bright spot for major exits in Q3 was the announced
acquisition of Figma by Adobe. While there remain significant
challenges before closing this deal, which will likely receive
strong scrutiny from regulators, at $20.0 billion, the deal is

17 Q3 2022 US VC VALUATIONS REPORT LIQUIDITY

 Sponsored by

Q3 median public listing valuation step-up nearly half of Q2 figure

Quarterly median valuation step-up at exit by type

3.5x

3.0x

2.5x

2.0x

1.5x

1.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020 2021 2022*

Acquisition Public listing
Source: PitchBook | Geography: US
*As of September 30, 2022

Median step-up at exit plateaus

Rolling four-quarter median step up at exit by type

2.2x

2.0x

1.8x

1.6x

1.4x

1.2x

1.0x
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2017 2018 2019 2020 2021 2022*

Acquisition Public listing
Source: PitchBook | Geography: US
*As of September 30, 2022

18 Q3 2022 US VC VALUATIONS REPORT LIQUIDITY

 Sponsored by

Deal terms
Markets becoming more investor friendly fast
VC Dealmaking Indicator by quarter

100
90
Investor friendly

80
70
60
50
Startup friendly

40
30
20
10
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018 2019 2020 2021 2022*

Early-stage normalized smoothed index Late-stage normalized smoothed index

Source: PitchBook | Geography: US
*As of September 30, 2022

Our VC Dealmaking Indicator shows that the US venture Cumulative dividends helping protect investors
market has quickly turned back toward being investor friendly. Deals with cumulative dividends as share of all VC deals
While that methodology includes comparisons over time for
capital availability, it also includes changes to deal terms.
30%
More structured equity deals in a tough environment are
expected, particularly when compared with the loose nature
25%
of dealmaking in 2021. Cumulative dividends, those that must
be paid, have increased, a change from the trend seen over the
past decade. This downside protection is just one of several 20% 18.7%
expected to continue to show up in term sheets as the market 16.7%
moves back toward being investor friendly.
15%

Down rounds have been expected to come back in a major way,

especially as public multiples have contracted leaving private 10%
companies exposed with valuations that don’t represent their
business metrics. Though data is low for Q3, initial data shows 5%
that down rounds have indeed increased quickly. On an annual
basis, the percentage of down rounds remains low, but the quick
0%
shift in proportions indicates that investors can expect down
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

rounds to continue to pick up through the market slowdown.

Though companies have alternative sources of capital, such
Source: PitchBook | Geography: US
as debt, that can extend runways without a priced round, this *As of September 30, 2022
is generally reserved for strong underlying businesses. If the

19 Q3 2022 US VC VALUATIONS REPORT DEAL TERMS

 Sponsored by

Average dividend falls under 7% Participating shares still decline by proportion

Average dividend Deals with liquidation participation as a share of all VC deals

7.6% 40%

7.5% 35%

7.4% 30%
7.3%
25%
7.2%
20%
7.1% 7.03%
6.99% 15%
7.0%
8.9% 8.2%
10%
6.9%

6.8% 5%

6.7% 0%
2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*

2012

2013

2014

2015

2016

2017

2018

2019

2021
2020

2022*
Source: PitchBook | Geography: US Source: PitchBook | Geography: US
*As of September 30, 2022 *As of September 30, 2022

economy falls into a recession, the economic pain inflicted on swift drawdowns. Though layoffs can help extend runways too,
many companies should manifest in down rounds—or outright eventually many unicorns will need to return to an equity raising
failures—as debt will become less available. The growing group market that is much less hospitable than the one in which they
of unicorns seems especially prone to down rounds since last raised capital.
comparable public companies have seen their market caps take

Down rounds quickly shift toward increase

Share of VC deals by up, flat, or down rounds by quarter

100% Down

90% Flat
Up
80%

70%

60%

50%

40%

30%

20%

10%

0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2017 2018 2019 2020 2021 2022*

Source: PitchBook | Geography: US

*As of September 30, 2022

20 Q3 2022 US VC VALUATIONS REPORT DEAL TERMS

Additional research
Venture capital

Q3 2022 PitchBook-NVCA Analyst Note: Q3 2022 SPAC

Venture Monitor Market Update

Download the report here Download the report here

Analyst Note: Down Analyst Note: Serial

Rounds, Impacts, and Exit Entrepreneurs Raise
Opportunities More Capital, but at What
Cost?
Download the report here
Download the report here

More research available at pitchbook.com/news/reports

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