10 things PitchBook learned by surveying investment experts

August 11, 2022 - 3 min read

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With US VC deals slowing, and European VCs speeding up, where will startup investment go in the coming months? A 2022 investor survey carried out by Web Summit and PitchBook shows finding value for money may be tricky. Read on for expert insights on investment trends.

The global VC industry has more than US$500 billion in dry powder available, with VCs consistently seeing best returns from private investment strategies, which are driving most interest and capital.

According to PitchBook’s survey, European VC deal value remains strong, with €27.5 billion invested in the first quarter of this year. PitchBook also indicated that, after a record-setting 2021, the US has slowed down, with US$70 billion invested during Q1 of 2022.

While the VC industry has been resilient throughout the pandemic, a wider economic downturn – brought about by a range of geopolitical factors – looks set to provide tough market headwinds in the year ahead.
Here are some of the report’s key findings, as laid out by PitchBook:

Investment

In the past 12 months, more than half of surveyed investors (53 percent) have made between one and five investments, down from two thirds of investors surveyed in 2021. 30 percent of respondents have made between six and 10 investments, compared to two thirds of respondents in 2021. Nearly one third of surveyed investors said that, out of these investments, at least 75 percent were first-financings.

First-financings continue to close at a historically high rate in 2022. With more than 1,000 deals closed, Q1 ended with more companies raising their first institutional capital than in any quarter prior to 2021.

59 percent of surveyed investors agreed that record levels of capital from nontraditional sources – including corporate venture capital and financial institutions – has been the main driving force behind increased deal sizes.

Evaluation

When it comes to the most important investment opportunity criteria, executive team pedigree moved to the top, followed by business model. This was reversed in the survey carried out prior to Web Summit 2021.

Half of surveyed investors agreed that growth must come before profit for VC-backed technology startups, while nearly one-third disagreed.

83 percent of respondents either agreed or strongly agreed that increased deal sizes across financing stages are pushing up valuations and making it harder to find good value-for-money investments.

When evaluating external pressures – such as public market volatility, increasing interest rates and talent market shifts – facing the VC ecosystem, 45 percent of respondents disagreed that their investment activity will markedly decrease from recent years.

Opportunity

Emerging technologies continue to attract capital from investors. Fintech, AI and machine learning were the three industries predicted to see the most disruption in the coming years.

58 percent of respondents named North America as the most exciting region to invest in right now. After North America, Africa and APAC tied for second.

When asked where VC investors should focus their attention to have the most impact, environmental and social concerns dropped off the top spot it held in the 2021 survey results, replaced by ’improved long-term investment’.

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Main image of a PitchBook employee sharing insights on investment trends at Collision 2022: Sam Barnes/Web Summit (CC BY 2.0)

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