Georgia companies raised half the amount of venture capital in 2022 compared to a year prior. Shifting investor priorities made it much harder to raise capital in the last half of the year.
In 2022, venture deals into Georgia totaled $2.25 billion across 287 deals, according to PitchBook and National Venture Capital Association's latest report. That pales in comparison to 2021’s total of more than $4 billion, twice the amount raised in 2020 and a record-setting year for the state.
That slope corresponds to what was seen across the nation. U.S. startups collectively raised $238 billion, a 30% decrease from the previous year.
The shrink of investment capital is due to investors trading their focus on the growth of companies for their profitability. That shift has led to numerous layoffs from tech companies across the U.S. in the past half-year in order to cut costs.
Georgia companies that laid off workers the past year because of shifting market dynamics included digital experience startup FullStory, marketing software firm Terminus and data privacy and security company OneTrust LLC. Technology giants across the nation also slashed head counts in the last half of the year to cut costs, including Meta Platforms Inc., Intel Corp. and Twitter Inc.
Company valuations have also subsided from their uptick in 2021. Companies whose valuation declines from the prior time they raised capital don’t tend to seek outside funding.
Multiple Georgia companies reached $1 billion valuations in 2021. But that was when valuations were up to five times what a similar company would have been worth previously, serial entrepreneur David Cummings told Atlanta Inno in April. The local startup ecosystem could be in an 18- to 24-month drought of new unicorn companies, Cummings added.
The amount of venture deals in Georgia continued to decline quarter-by-quarter in 2022. Companies in the state saw a 28% decrease of venture funding in the third quarter, and a 33% drop in the second. In the fourth quarter, that figure went down another 23% to $373 million.
The largest investments made for companies in the state were $150 million into crime surveillance startup Flock Safety, $120 million into supply chain company Stord, $120 million for robotics company GreyOrange and $118 million into real estate crowdfunding company into Groundfloor.
PitchBook predicts that 2023 will also be another year where venture capital will slow down, although seed-stage companies may show some resiliency.
While investors have retracted, the availability of capital for them hasn’t dwindled. The past year marked an all-time high for VC fundraising, according to PitchBook. VC firms raised more than $162 billion.
During the final quarter of 2022, Georgia maintained its ranking of No. 13 from the previous two quarters among U.S. states for capital invested. States with the most capital invested in the fourth quarter were California ($14 billion), Massachusetts ($4.2 billion) and New York ($3.9 billion).
At $656 million, Florida was the only Southeastern state with a higher amount of venture capital investments during the last quarter than Georgia.
