Global Venture Capital Funding Cools Down in Early 2022

Global venture capital funding for startups dropped in the beginning of this year, after a record-breaking end of 2021. Across the world, startups brought in nearly $144 billion in the first three months of 2022.

There’s a 19 percent drop compared to the nearly $178 billion of global venture capital funding raised in the final three months of 2021, according to a new report by market intelligence platform CB Insights.

The trend in the Swedish startup scene looks slightly different though, with more funding during that same time span; from $736 million in Q4’21 to $775 million in Q1’22.

However, the number of deals in early 2022 has fallen for the third consecutive quarter. The first three months of 2022 saw 94 deals in Sweden, compared to 116 in Q4’21.

Sten Tärnbro, an analyst for the Swedish Private Equity and Venture Capital Association, said that in a smaller market like Sweden, quarterly data will always fluctuate depending on which start-ups are raising capital.

“The Swedish VC market has been strong over the last couple of years with successful investment and exits, new funds entering the market and new fundraising from established investors,” Tärnbro said. “This maturation of the funding ecosystem makes it more resilient.”

Tärnbro said they’ve also seen an increase in growth capital funding in Sweden, which could explain an increase in funding despite a decrease in deals.

SVCA expects an impact from current events, but has an overall positive outlook for 2022

The Swedish Private Equity and Venture Capital Association also expects to see an impact from current events in Europe.

“We expect the investments to decrease compared to the strong Q2 2021 as the markets prices in the geopolitical uncertainties from Russia’s invasion of Ukraine and the expected global rate increases,” Tärnbro said.

The SVCA’s overall view of the European VC market is still positive, even if investments decrease in 2022. Tärnbro said the European market is expanding and they are monitoring increased activity in several regions.

“There is still a large amount of dry powder in the venture capital and private equity market that is looking for investments,” Tärnbro said.

If you’d like to read the full report, you can read it here. The analysis of the Swedish startup market is on page 260.