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North American Startup Funding Fell Further In Q2

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The decline in North American venture funding is getting more pronounced.

Startup financing fell across all stages in the second quarter of 2022, with the drop most extreme at the latest stages. While North American investment levels remain high by historical standards, they’re down sharply from their peak late last year.

In total, startup investors put $62.7 billion to work in seed through growth stage deals in the just-ended quarter, per Crunchbase data. That marks a decline of 27% from Q1 of this year and a drop of 25% from the year-ago quarter. Round counts contracted along with overall funding.

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To put the latest numbers in perspective, we look at investment totals by stage for the past 10 quarters below:

The Q2 fall comes amid a sharp and escalating public market downturn for technology and life science companies, which has spilled over into private startup valuations as well. With the market for new public offerings virtually shuttered, investors haven’t been pumping big sums into pre-IPO rounds either, contributing to the funding slowdown.

Below, we break down the latest numbers for Q2 and the first half of 2022, focusing on investment by stage, standout rounds and exits.

Late stage and technology growth

We’ll begin with late stage. This is where most of the money gets spent as well as the stage that saw the sharpest funding declines.

Overall, investors put $36 billion into late-stage and technology growth rounds in Q2. That’s a decline of 33% from Q1 and 30% from the year-ago quarter. It also marks the lowest quarterly funding total at this stage since 2020.

Round counts, meanwhile, totaled 371, down 25% quarter over quarter, and 27% year over year. For a broader picture, we lay out investment totals and round counts for the past five quarters in the chart below:

As usual, a few outsized rounds contributed disproportionately to boosting the totals. For Q2, one standout on this front was The Boring Company, the Elon Musk-founded developer of underground transportation networks, which raised $675 million in an April Series C funding.

Other big funding recipients included Resilience, a biomanufacturing upstart that raised $625 million in a June Series D round, and Faire, a marketplace for retailers to purchase wholesale goods that raised $416 million in Series G financing.

While big late-stage financings continued to get done, it was against a backdrop of cuts and contracting valuations at many unicorns. In the brutal sweep of layoffs hitting U.S.-based tech companies this year, late-stage startups have fared the worst, according to a Crunchbase News analysis. Many of the most heavily funded unicorns are also seeing valuations slashed this year, including Stripe, Reddit and Instacart.

Early stage

Early-stage (Series A and B) investment is also down, but is seeing less contraction than late stage, per Crunchbase data. In total, investors put $23.1 billion into early-stage startups in Q2, down 15% from the prior quarter and 17% from the year-ago quarter.

Round counts were down by a similar level, with an estimated 1,015 early-stage deals in Q2, down 15% from Q1 and down 20% from the year-ago quarter. For perspective, we lay out investment totals and round counts for the past five quarters below:

Notably, while Series A and B dealmaking is well below peaks of 2021, funding is still at a level that would have been typical in 2020. Big rounds are also continuing to close.

The largest B round this year went to Anthropic, a San Francisco-based artificial intelligence research company that pulled in $580 million in April. Other large funding recipients include Velocity Global, a provider of tools for managing global workforces, which raised $400 million, and Beta Technologies, an electric aircraft startup that raised $375 million.

A more muted contraction at early stage than late stage isn’t entirely surprising. Because Series A and B companies are typically years away from a potential exit, investors are less concerned about the shuttered IPO window, falling public tech valuations, and other market conditions of the moment. That said, venture backers are still pulling back, doing fewer deals and on average cutting smaller checks.

Seed stage

Seed-stage funding held up at historically high levels in Q2, even though investment was down considerably from its peak.

Investors put a total of $3.5 billion into North American seed deals in Q1, per Crunchbase data. That marks a decline of 30% from Q1, which was at an all-time high, and was about 6% below year-ago levels.

The number of disclosed seed funding rounds, meanwhile, totaled just over 1,300, by far the lowest count in more than two years. However, because seed rounds often get added to the Crunchbase dataset weeks or months after they close, we can expect the Q2 totals to rise a bit over time.

For a sense of how seed funding compares over the past several quarters, we lay out funding and round count totals in the chart below:

Big seed rounds remain popular. At least 51 North American companies raised so-called “supergiant seed rounds” of $10 million and up in Q2, per Crunchbase data (see list).

While seed rounds of such size used to be rare, they’ve become increasingly common in recent years. For Q2, standouts include Ascertain, a health care AI startup that snagged $100 million in April, and Fractal, a virtual world marketplace that raised $35 million, also in April.


With the IPO market mostly shuttered in Q2, venture-backed exits largely came from acquisitions. Crunchbase data showed acquirers snapping up VC-funded companies at a brisk clip, including several deals above the $1 billion mark.

We look at standout M&A deals and public offerings for the quarter below:


Biotech, deep tech and e-commerce companies all scored some big exits in Q2.

The largest disclosed-size deal of the quarter was British pharma giant GSK’s purchase of Affinivax, a developer of pneumococcal vaccines, for $2.1 billion upfront and up to $1.2 billion in potential milestone-based payments. Cambridge, Massachusetts-based Affinivax had previously raised over $350 million in venture funding.

The second-largest deal was an e-commerce play. Shopify snapped up Deliverr, a provider of shipping and fulfillment services for online retailers, for $2.1 billion. Founded in 2017, Deliverr previously raised over $490 million in venture funding.

In third place was AMD’s $1.9 billion acquisition of Pensando, a developer of microprocessors for enterprise and cloud computing. Founded in 2017, Silicon Valley-based Pensando previously raised over $300 million in venture backing.

Below, we lay out seven of the largest M&A deals announced in Q2:

Public offerings

A few venture-backed companies made market debuts in Q2. But overall, the IPO window was largely shuttered, and those that did make it to market mostly did so through previously announced SPAC deals that took a few months to close.

The largest debut was Pagaya, a provider of AI-enabled tools for lenders to locate and evaluate borrowers. The New York- and Tel Aviv-based company completed a SPAC merger and began trading in late June.

SoundHound, a developer of conversational AI technology, made its debut in April, also through a SPAC deal. Another new SPAC deal market entrant in Q2 was Grove Collaborative, a maker of sustainable home products.

Below, we list five public market debuts of venture-backed companies in Q2:

The pullback gets more pronounced

Overall, Q2 was not the happiest time for venture-backed startups and their investors. With crashing public market comps for unprofitable tech companies, startups are facing rising pressure to reduce burn and enable existing cash reserves to last longer.

However, the fact that the severity of the funding dropoff is far more pronounced at the later stage has some bullish connotations. Investors appear more confident about prospects for early- and seed-stage deals, which have a chance of reaching maturity under more upbeat market conditions.

For now, however, after many, many quarters of rising investment, the cycle has clearly reversed course.


The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of July 5, 2022.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman


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