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For some, the spookiest thing October brought may not have been ghouls, or ghosts, or Liz Truss lettuce costumes, but the continued drop in VC funding.
In October…VC funding clocked in at $27 billion, per Crunchbase—down more than 50% year over year, but basically equivalent to the prior month. Deal count also hit a recent low, falling to 1,800 in October, compared to nearly 2,200 in September and 3,400 in January.
- The trends were the same this month as in months prior: The later the stage, the deeper the pullback. Earlier-stage startups saw more modest declines in funding than later-stage companies.
Finding financing: As VCs continue to show restraint—even despite, at least in the US, having amassed record-shattering levels of dry powder—startups are seeking out alternative forms of financing. In the first half of this year, some startups began looking to secure debt in absence of willing equity investors, but venture debt funding fell off a cliff in Q3 due, in part, to rising interest rates, per Pitchbook.
But with the Big Two funding formats either tough to come by or tough to swallow, CFO Brew reports that more creative forms of funding (e.g., tapping into non-accredited investor funds through a securities law called the 40 Act) are becoming available.