While the end of the more than decade-long tech investing bull cycle was far from unanticipated, many venture investors were not prepared for the swift market downturn that began to take shape in early 2022.

Despite the harsh headwinds of inflation, rising interest rates and geopolitical uncertainties, VCs continued to deploy capital near all-time highs. In 2022, a total of $283.3 billion was invested in US companies across an estimated 17,990 deals, a record that falls just behind the blockbuster deal activity of 2021, according to the latest PitchBook-NVCA Venture Monitor.

Although it appears that venture capitalists may not have made a sharp course correction to their overall investment pace, a closer look at the data reveals that deal activity slowed down steeply for later-stage companies while remaining robust for seed investments.

The bifurcation displays investor sentiment about two widely accepted concepts: Mature startups are the most vulnerable to volatility in the public markets, and the best companies are built when capital is scarce. Acting on those narratives, many investors have flocked to fund new startups while leaving late-stage companies in the cold.

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