TLDR:
- Total annual venture capital investment rose more than tenfold from the start of the Great Recession in 2007 to venture capital funding’s peak in 2021.
- From 2021 to 2022, total VC funding fell by almost half, from $443 billion to $256 billion, as inflation began to spike and interest rates rose.
Growth in venture funding has dramatically outpaced GDP in recent decades, with total annual venture capital investment rising more than tenfold from the start of the Great Recession in 2007 to venture capital funding’s peak in 2021. This growth was buoyed by low interest rates during the long recovery from the recession. However, from 2021 to 2022, as inflation began to spike and interest rates subsequently began to rise, total VC funding fell by almost half, from $443 billion to $256 billion.
This decline in total VC funding highlights the impact of changing economic conditions on investment patterns. The shift from high growth in venture capital investment to a significant decrease within just one year sheds light on the volatility of the business funding landscape. Investors are urged to adapt to changing economic conditions and market trends to navigate the fluctuating environment successfully.
