The trend of corporate money flooding the startup zone is going to take some time to unwind
The global venture capital market didn’t reach its 2021 peak in a year. It will also take a good amount of time to unwind from last year’s excesses.
That fact is clear in new corporate venture capital (CVC) data collected by business intelligence concern CB Insights. Per the company’s latest report on the topic, CVC activity was strong in the first quarter, albeit with some weak spots that we suspect developed as the first quarter rolled through its final month.
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Given recent trends that we’ve observed in the larger venture capital market, expecting CVC to reverse course and charge back toward records feels unlikely; more declines seem to be a reasonable expectation.
That CVC is in retreat as venture capital overall decelerates is not a surprise. CVC figures were a component of venture’s rise, and as they were coupled on the way up, seeing them decline at the same time is hardly bewildering.
The somewhat modest declines in CVC that we’ll observe shortly are important for reasons other than simply tracking available investment flow for startups. Recall that TechCrunch explored the concept of historically elevated levels of CVC investment potentially converting into notable startup M&A volume this year. That corporate venture capital was not in rapid decline in Q1 2022 gives extra weight to the concept, as there are now even more potential investment deals to convert into acqui-hires as the year progresses.
Let’s get our hands around the changing pace of CVC activity and then whittle down our focus to geographic trends to see where things are hotter and cooler. (Hint: Europe and China are outliers, in opposite directions.) We’ll close with a recap of the M&A argument and chat about which CVC may be the most overexposed to changing venture conditions.