Just three months after bringing in its largest venture capital haul ever in a single quarter, Greater Philadelphia saw the number of VC deals and capital raised plummet in 3Q.
Companies in the region made 89 deals in the third quarter totaling $619.6 million, according to the latest PitchBook-NVCA Venture Monitor report. That was the smallest deal count and lowest venture capital total raised since the fourth quarter of 2020, when Greater Philadelphia companies raised $460 million across 87 deals.
The region's decline in VC investment is part of the larger national venture capital ecosystem "showing more signs of distress in response to ongoing economic headwinds," according to the PitchBook report. The drop-off is particularly pronounced in Greater Philadelphia, coming on the heels of a record second quarter with nearly $2.7 billion in funding for startups across the Philadelphia-Camden-Wilmington metro area.
The third-quarter fundraising total was a 77% slide from 2Q and 71% less than the $2.14 billion raised during the same three-month period last year. It was just the second time since the start of 2021 that the region failed to surpass $1 billion raised and the first time it recorded fewer than 100 deals.
Greater Philadelphia's slowdown isn't necessarily a sign that it's slipping behind other markets, though. Total money invested in startups across the country reached a nine-quarter low.
Across the larger Philadelphia combined statistical area (CSA) — which stretches as far as Reading to the West, the Jersey Shore to the East, and Dover, Delaware, to the south — there were a total of 103 deals in July, August and September. That puts the region fifth nationally, trailing only the Bay Area (586 deals), New York (449), Los Angeles (321) and Boston (184).
However, of the top 12 markets, the broader Philadelphia region's $681.1 million raised was the smallest funding total. Eight of those 12 CSAs topped $1 billion in total investment.
The national and local slowdown comes following a 2021 that saw record fundraising — nationally and locally. Greater Philadelphia startups raised $6.46 billion in 2021, more than doubling the record set the previous year of $2.7 billion, according to updated Pitchbook data. By the same token, companies across the country raised $329.9 billion in 2021, almost doubling the national record of $166.6 billion raised in 2020.
"In many ways, 2021 was an outlier year, and the VC market is now returning to pre-pandemic levels and long-term trends of steady growth,” John Gabbert, founder and CEO of PitchBook, said in a statement.
Philadelphia also has one of the best startup climates for female founders. Women have raised $600 million during 2022, the fifth-highest total in the U.S., Pitchbook reports.
Some of the largest deals in the third quarter include a $75.2 million Series B round from SparingVision, $38 million Series A funding from The Rounds, a $45 million Series A round from Savana and PurpleLab Inc.'s $45 million Series B.
