Citi Global Wealth UNSToPPABLe TreNDS | | 70 Investments This public market weakness has seeped i.e., when they sell ownership stakes to venture year, as valuations in late-stage private markets through to late-stage VC companies. The median capital firms – are not heavily based on valuation and public markets reset. Nevertheless, pre-money valuation – or valuation just prior to multiples. Instead, they focus more on factors technology deal activity has remained robust in an IPO or funding round from private investors such as the size of the market they’re involved 2022. Although down 10% from 2021’s elevated – was 9% below 2021’s level at $91m, as of the in, whether their product fills a gap in the levels, it still stands significantly above any third quarter 2022.3 market, their market leadership potential and previous year. And while overall VC deal activity growth rate. has fallen for three straight quarters from those For seed and early-stage VC companies – those 2021 highs, VC activity has already exceeded all at an earlier stage of development – valuations That said, even seed and early-stage VC prior years except for 2021 – FIGURE 2. have held up better. Deals involving such firms – valuations will likely decline over the coming FiGUre 2. US veNTUre CAPiTAL DeALS FALL FroM THeir HiGHS $100 Deal value ($B) Deal count Angel & seed Early-stage VC Late-stage VC 5,000 $90 4,500 $80 4,000 $70 3,500 $60 3,000 $50 2,500 $40 2,000 $30 1,500 $20 1,000 $10 500 $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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2016 2017 2018 2019 2020 2021 2022 Source: Pitchbook, as of 30 Sep 2022. Chart shows US venture capital deal activity by quarter since 2015, with the green bars denoting total deal value and the lines showing deal counts across angel & seed, early-stage VC and late-stage VC categories. 3 Source: Pitchbook/NVCA. as of 30 Sep 2022