The second quarter of 2022 brought an expected continuation of market tightening in some parts of the US venture capital (VC) ecosystem that began to surface in Q1 2022. However, other areas of the VC cycle seem to be relatively unaffected thus far, particularly startups at their early stages who have been further insulated from late-stage and public market corrections, as well as larger VC funds that continue to see strong limited partner (LP) interest. Several themes are playing out that VC investors and startup founders are closely monitoring to better navigate the length and impact of the industry correction as it trickles down from the public market slowdown, inflation concerns, and the tightening monetary environment.

The IPO window was virtually shut in Q2 2022, and VC-backed public listings reached a 13-year quarterly low with eight completed in Q2 2022. This has meant that late-stage companies that may have been on the road to a public listing or that often rely on public market valuations to help price their financing rounds have had to pivot liquidity strategies and cool pricing expectations. In comparison, buyout and corporate M&A numbers are down somewhat from the heights of 2021, but they are on par with 2020.