Seattle-area venture capital funding is coming back to Earth after a red-hot 2021.
Companies in the Seattle area landed $7.8 billion across 479 venture capital deals last year, according to PitchBook-NVCA Venture Monitor's fourth quarter report for 2022. That's down from $9.2 billion across 494 deals in 2021. The report is jointly produced by Seattle-based financial data firm PitchBook and the National Venture Capital Association.
"In raw numbers, 2022 was a great year for the VC industry, with most indicators of market activity at or near record highs," the report's executive summary said. "When graded against any year other than the stratospheric 2021, industry activity was extremely strong. However, it is important to look at the quarterly trend, where activity dropped off steeply between the first and last quarters of 2022."
Deal value in the Seattle area last year trailed that of major tech hubs like the Bay Area, which generated $75.4 billion in venture capital last year, and New York City, which generated $31.4 billion. The Puget Sound region, however, led other growing tech hubs like Austin, Texas, ($4.9 billion) and Miami ($5.5 billion).
Last year was a mixed bag for Seattle-area tech companies, with major fundraises and major layoffs both grabbing headlines. According to John Gabbert, founder and CEO of PitchBook, factors like rising interest rates are contributing to the slowdown in venture capital activity.
“Unable to justify the sky-high valuations seen in 2021 and retreating from the ‘growth-at-all-costs’ mindset seen in recent years, many investors are pulling back until the ecosystem returns to a more palatable normal,” Gabbert said in a release accompanying the report.
Nationally, there were an estimated 15,852 deals for a total of $238.3 billion in venture capital funding last year. Those numbers are higher than any other year besides a record-shattering 2021, when there were 18,521 deals for a total of $344.7 billion in venture capital funding, according to the report. Exit value nationally, meanwhile, was $71.4 billion in 2022, down from $753.2 billion in 2021. The last time exit value was below $100 billion for the year was 2016 at $64.7 billion, according to the report.
