US VC Deal Spending Falls by Half in Second Quarter, Report Says

Venture capitalists are funding fewer startups, especially at the earliest stages of a company's life, according to new data from research firm PitchBook. From a report: In the US, investors financed 3,011 startup funding deals last quarter, about a third fewer than a year ago. And they spent a lot less cash: $39.8 billion, down by nearly half from the same period last year. Take out the more than $6.5 billion investors spent on payments company Stripe, and the total looks even worse, said PitchBook analyst Kyle Stanford. The biggest drop came in angel or seed deals, which is financing for startups usually still at the concept stage. In that category, there were half as many funding deals as there were a year earlier. Those early funding rounds -- when young companies are either nurtured or starved -- are generally considered to be critical to the health of the venture ecosystem. But the lower deal numbers aren't all bad news, Stanford said. In the heady days of the pandemic boom, there were "probably too many" startups raising money because the public markets can only support so many public offerings, he said. "Starting these companies slower is probably healthy."

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