Welcome to Q4, friends. If you were hoping to start the latter part of 2022 with some good news, hard. Instead, we start the quarter with raw data.
Sure, we’re waiting for data dumps from CB Insights, PitchBook, and Crunchbase on third-quarter venture capital aggregates, but one particular indicator we’re tracking here at The Exchange is a flashy weakness as we stare at a race full of holidays and events through the end of the year. the calendar year.
Today we are looking at unicorn food. Unicorns eat capital and excrete value, at least in theory, a relationship that was in full swing last year. Massive nine-figure venture capital rounds were fueled by crossover investors and others piling up in the startup realm, pushing the valuation of many a startup to stratospheric levels. Some of those bets will pay off, like the Figma Series E from last June. Many will not.
What matters for our purposes, however, is that the rate at which unicorns are raising capital is slowing not only from last year’s epic fundraising period, but even compared to the distant past. If unicorns can’t raise as much this year as they did in, say, 2019, how many of the billion-plus dollar startups will survive?
Not that we’re going to predict a unicorn culling this early in the week, but the data is disturbing.
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Today we’ll be looking at the Crunchbase data to get a handle on where investor sentiment rests today and then talk about what could break the block.