The amount of venture capital funneled into St. Louis firms in the third quarter of 2022 reached its lowest total in recent years, a development that comes as the amount of deals closed by startups nationwide continues to slide.
A report released Thursday by PitchBook and the National Venture Capital Association tracked 10 startup deals in St .Louis totaling $56.4 million in the third quarter. That’s down from 13 deals and $68.8 million in funding for local companies in the second quarter.
The funding dollars raised in the last six months by local startups are down significantly from the fourth quarter of 2021 and first quarter of this year, when local firms raised $338.8 million and $162.6 million, respectively. The 10 St. Louis startup deals tracked by Pitchbook in the third quarter is the fewest deals locally since 10 deals were recorded in the fourth quarter of 2017. The $56.4 million raised in the third quarter by local firms is the smallest quarterly total since St. Louis companies raised $39.9 million in the second quarter of 2019, according to Pitchbook’s data.
Nationwide, venture dollars snagged by startups dropped for the third consecutive quarter. In the third quarter, startups closed 3,076 funding deals totaling $43 billion, down from $71.9 billion and 4,055 deals in the prior quarter. While funding is down significantly from recent quarters, Pitchbook said the venture capital industry “isn’t panicking over quarterly fluctuation” and that the most recent quarterly figures are “above historical averages.” For instance, in the third quarters of 2019 and 2020, U.S. startups raised $37.5 billion and $47.8 billion, respectively.
In St. Louis, top funding deals closed in the third quarter include a $17 million Series A financing for senior caregiving startup TCARE and $5 million in seed funding for Web3 upstart yWhales Enterprises.
Locally, venture capitalists in recent months said their portfolio companies are experiencing the effects of funding slowing down, with investors saying they are telling startups to take into account the tightening venture market as they plot growth.
In its report, Pitchbook said the third quarter “can provide reasons for optimism or pessimism.”
“The facts of Q3 paint a mixed picture for the VC industry,” the report said. “Investors report that they are making deals, and there is a consensus between (fund) managers and founders on how to prepare for potential challenges ahead. The market is also becoming increasingly consolidated and realizing fewer exits than at any time in recent history. Recently enacted federal legislation promises to make more funding available for managers and founders alike.”
