Late-Stage Startup Valuations Are Plummeting in 2022

  • New data shows late-stage startup valuations are falling off in the first half of 2022.
  • These drops come after a record-breaking year for venture capital in 2021.
  • These valuation cuts signal a market correction for VC-backed companies.

After a record-breaking year for venture capital in 2021, more signs are indicating that this honeymoon phase for the VC market and the startups they back has come to a rapid halt.

According to new data obtained from Next Round Capital and leaked data from secondary-market investors, many of the largest unicorn late-stage startups have seen their valuations slashed since the fourth quarter of 2021. A few of the most notable cutbacks include grocery-delivery giant Instacart, TikTok’s parent company Bytedance, and the Swedish


buy-now-pay-later

company Klarna. These startups have seen their valuations fall by $ 17 billion, $ 45 billion, and $ 15 billion, respectively. Of the companies Insider reviewed, only SpaceX saw its valuation increase.

Many factors are likely contributing to this great valuation pullback. Rising interest rates, more frequent supply-chain snares, and rampant inflation are all contributing to a market slowdown as investors shy away from riskier investments like venture capital. As the market enters a


recession

growth-stage startups have traditionally been hit hardest first, since their investors are typically closer to the public market and therefore are getting hit hard by the stock-market downturn.

Certain startups like Instacart saw rapid growth during the pandemic, with more people relying on delivery services than ever before. Now that businesses and offices are reopening, some customers are no longer willing to pay the high surcharges that come from delivery orders.

Insider rounded up data on how valuations have shifted at 15 of the largest unicorns, or startups valued at $ 1 billion or more. The list is below.

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