The number of tech unicorns decreased by 40% in 2022, per the Global Startup Ecosystem report, as venture capital investments decreased as a result of the economic downturn.
The number of tech unicorns decreased by 40% in 2022, per the Global Startup Ecosystem report, as venture capital investments decreased as a result of the economic downturn.
With a 40% global drop from 2021’s 595 to 359, we noticed a slowdown in the number of tech unicorns last year. In spite of this, seven ecosystems still gave birth to the first tech unicorn in 2022, according to a report by Startup Genome and the Global Entrepreneurship Network (GEN).
According to the study, a recession is a good time to invest in startups because it concentrates resources and talent into businesses that add value. Startups funded during the Great Recession had slightly higher exit multiples over total investment than those funded during economic expansions.
Despite current economic difficulties, JF Gauthier, CEO of Startup Genome, expressed his confidence that, armed with the right information, entrepreneurs, policymakers, and community leaders worldwide can take advantage of opportunities to collaborate and demonstrate how innovative technologies can not only continue to drive growth and job creation but also help save the planet and ensure a better future for everyone.
“While we wait out these uncertain economic times, this important mission cannot be postponed.” Global VC funding started to decline in the first quarter of 2022, falling 13% from the fourth quarter of 2021. According to the report, 2022 will be down 35% from 2021 overall.
The number of deals fell by 18%, but the amount of deals fell by 17%, so the average deal size increased by 2% even though fewer startups were funded globally in 2022.
The $32.6 billion initial public offering (IPO) of Miami-based MSP Recovery was the largest tech exit of the year, but it was dwarfed by the $150 billion IPO of Beijing-based Kuaishou in 2021, which was nearly five times bigger.
The sub-sector with the highest number of total venture capital deals in 2022, accounting for 28% of the global share, was AI and Big Data, reflecting the growing use of AI and its intersection with other sub-sectors. Additionally, it experienced the highest growth in the number of exits from 2017–2018 to 2021–2022, at 74%.
Deep Tech innovations have become more integrated into startups, leading to a 326% increase in exit amount from 2017-2018 to 2021-2022. Asia experienced a 31% drop in VC funding from $102 billion to $70 billion, but Asia was the least impacted global region in terms of early-stage funding amount.
Europe saw a 15% decrease in early-stage funding in 2022, but the average early-stage deal amount grew by 7% due to a reduction in early-stage deals.
Between 2021 and 2022, Series B+ funding fell by 72% for Latin America, and the number of deals fell by 54%. However, Latin America saw a 65% increase in deal volume and a 143% increase in Series B+ funding from 2018 to 2022.
MENA saw a 14% decrease in overall VC funding and a 19% decline in Series B+ deal volume, but a 96% increase in early-stage funding, a 28% increase in Series B+ deal volume, and a 113% increase in deal volume.
Series B+ deal value fell by 31% year over year in 2022 in Oceania, while the number of deals fell by 10% and the amount of early-stage funding fell by 13.6%. However, Oceania saw the largest global regional increase in early-stage funding for the period of 2018–2022, at 60.7%.
Early-stage funding decreased 5.9% and the total amount by 6.7% in sub-Saharan Africa between 2021 and 2022. Early stage funding to the region increased by 227% between 2018 and 2022, and the number of early stage deals increased by 43.8%.
Between 2021 and 2022, North America’s early-stage funding fell by 26%, and the number of Series A deals decreased by 25%. Nevertheless, with 50% of the top 30 and the runners-up spot, North America continues to be the world’s top startup nation.
The top three ecosystems from 2020 are still in the same order, with Silicon Valley at the top and New York City and London tied for second. Despite having a smaller market share, Silicon Valley still reigns supreme, with Series A deal amounts dropping by 75% and Series B+ by 73% between 2021 and 2022.
India’s growth continued while China’s power waned. Eight Chinese ecosystems, including Beijing, Shanghai, and Shenzhen, dropped from the list from the previous year. Delhi and Bengaluru-Karnataka are two of the seven Indian ecosystems that advanced to the top 30.
Boston and Beijing lost two spots and fell out of the top five. Tel Aviv and Los Angeles both rose two places. Singapore rose 10 spots to No. 8 and became the eighth country to break into the top 10. Melbourne also made progress, moving up to No. 33. From Global Startup Ecosystem report 2022, the Australian ecosystem’s Ecosystem Value increased by 43%.
Over $1.5 trillion is the total ecosystem value of the top 100 emerging ecosystems, up 50% from the GSER 2022.
The new Strong Starters ranking, which identifies the top 25 Emerging Ecosystems where early-stage funding activity is most active, placed Istanbul in the top spot.
“We know that tough economic times can produce high-performing startups because more than half of the businesses on the 2009 Fortune 500 list were founded during a recession or bear market,” according to Jonathan Ortmans, president of the Global Entrepreneurship Network.
“Despite recent declines in investment, this report foreshadows where we might see the world’s most disruptive and solution-driven companies emerge in the years to come—and provides unparalleled insights that policymakers and community leaders need to build resilient startup ecosystems,” the summary of Global Startup Ecosystem report reads.