Where will it be deployed? • TechCrunch

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His fundraising project At a solid pace, but much less cash is distributed.

Let’s start with some headlines:

  • Bessemer in September raised about $3.85 billion for early-stage startups, the largest vehicle the company has had in 50 years.
  • Insight Partners in February raised more than $20.0 billion, double its previous fund (which closed in April 2020 at $9.5 billion).
  • Lightspeed in July raised more than $7 billion through four seed funds to Series B rounds.
  • Battery Ventures in July raised more than $3.8 billion with a broad mandate.
  • Founders Fund in March raised more than $5 billion across mutual funds ($1.9 billion) and growth ($3.4 billion).
  • In May, a16z raised about $4.5 billion in its fourth fund targeting blockchain, bringing the total funds raised for blockchain-related companies to more than $7.6 billion.
  • a16z separately closed $9 billion in new capital in January, with $1.5 billion set aside for biotechnology investments.
  • Tiger Global is rumored to be raising PIIP 16 in what could be around $10 billion and its second largest fund ever.

Public markets have seen an extreme recalibration of valuation, and they are effectively flowing into private markets. All along, crossover funds and VCs have been watching from the sidelines – spreading capital in a somewhat “wait-and-see” mode.

Net/Net: More dollars raised with less use equals physically higher cash balances.

Image credits: Irving Investors

What do the numbers tell us?

Capital increase

Fundraising for venture capital has remained fairly flat this year. Venture capital firms have raised a total of $122 billion so far this year, and are on track to end the year with $172 billion.

A short-term “workaround” evaluation can become even bigger problems in the long run.

This is 20% less than 2021 ($214 billion), just below 2020 ($180 billion), and about 11% less than the average $194 billion raised annually since 2019.

This strong level of fundraising contrasts starkly with the poor performance of high-growth names in the public markets. For example, a high-growth SaaS bucket suffered losses ranging from 60% to 80% or more.

Image credits:

capital deployment

Total capital posted by venture capital in the second quarter of 2022 and the third quarter of 2022 has declined rapidly and is now averaging just $39 billion per quarter. This is on track to be the lowest reading since we can pull the data from 2017.

Currently, published capital in the third quarter of 2022 (less than $40 billion) is on track to be approximately 70% lower than the levels of the fourth quarter of 2021 (about $118 billion).

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