After four years of consecutive annual gains, global VC fundraising finally came back to earth in 2022. Firms worldwide closed on funds totaling $165.9 billion, down about 8 percent from their record haul of $179.7 billion in 2021. Still, 2022 is the second largest fundraising total in history, coming in about $51 billion higher than the third highest total, which was recorded in 2020. Notably, VCs around the globe have closed on more than $650 billion in new funds in the past five years.
Here are some other takeaways from Venture Capital Journal‘s exclusive research into 2022 fundraising data – and what to expect this year.
Average fund size soars
Overall fundraising may have declined, but the average fund size shot up dramatically last year, hitting a new record high. The average VC fund exploded in size from about $160 million in 2021 to $244 million in 2022. The increase is consistent with the overall trend of VC fund sizes growing ever larger. But the 52 percent jump is still noteworthy as it is the largest year-over-year gain since Venture Capital Journal began tracking fundraising data in 2008.
Regional focus broadens
North America remained the favorite region for newly closed funds, but interest fell slightly. Forty-seven percent of funds closed in 2022 said the region would be their main focus, down from 50 percent a year earlier. The biggest gain was in multi-regional funds, which grew from about one-fourth of the total in 2021 to about one-third last year. Interest fell for both Europe and the Asia-Pacific regions. Funds focused on Asia-Pacific declined from 17 percent to 13 percent, while those targeting Europe dropped from 7 percent to 5 percent.
The largest fund that closed last year was Tiger Global Investment Partners XV, which raised $12.6 billion. At number two was Alpha Wave Ventures II, a $10 billion vehicle managed by Chimera Capital, followed by Andreessen Horowitz LSV Fund III, which closed on $5 billion. To put the Tiger fund into perspective, it accounted for nearly one-fourth of the total capital raised by the 10 largest funds. The difference in size between the top 10 funds and the next 10 largest funds is quite stark. Funds ranked 11th through 20th closed on a combined $19.1 billion, compared with the $52.6 billion raised by funds ranked first through 10th.
Hungry, hungry hippos
As much capital as venture funds have raised, they are seeking even more. Funds in market as of January 20 were targeting a combined $259 billion, or $94 billion more than they closed on in 2022. Funds targeting North America have the biggest appetite. They are seeking $112 billion, or 43 percent of the total. Vehicles focused on Asia-Pacific are targeting $65 billion (25 percent of the total), while multi-region funds are in search of $57 billion (22 percent) and Europe-focused funds hope to raise $16.5 billion (6 percent).