Beacon Macro View: Q2 2022
Unless one has discovered an oil well in one’s backyard, Q2 was a punishing quarter. Sequoia dubbed it the ‘crucible moment’ which will transform us for the better, but not before some hardship. Predictably, portfolio companies are told to solve for “survivability” rather than ”growth at all costs”. The VC pendulum has shifted to the other end. Even before Klarna’s new round at an 85% discount to the previous one ($6bn vs. $40bn PMV), rumour has it that any D2C company with > 100 employees was asked by their investors to fire 20% of its workforce.
Shrinking global VC activity
Maintaining the Q1 downward trend, the global VC dollar volume was down both QoQ (26%) and YoY (27%) with later-stage deal volume down even more, by 38% YoY. While QoQ fluctuations are common in VC activity, YoY declines were unheard of in recent years. The stock market correction has now been fully translated into the VC market.
European VC activity shrinks too though it remains stronger than 2 years ago…
After a growing Q1, as we predicted in our previous report, Europe synchronised its performance with the global VC showing a 24% QoQ and 38% YoY drop off in VC volume. Finding the silver lining, Q2 activity was still $10 billion higher than each quarter in 2020 with round sizes holding up well at the early-stages thanks to the plethora of new funds in Europe as well as U.S. ones investing in the region.
…and public SaaS valuations drop below recent historical norms despite strong company performance
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