New Venture Investor Survey Reveals Inflation Has Had Minimal Impact on Investments

PitchBook and Web Summit Partner on Sixth Investor Survey Amid Increased Market Uncertainty

LISBON, Portugal, Nov. 2, 2022 /PRNewswire/ -- PitchBook, the premier data provider for the private and public equity markets, today released findings from a new survey conducted in partnership with Web Summit, the world's largest technology conference which takes place November 1-4, 2022 at Altice Arena in Lisbon, Portugal.

• Inflation has had little to no effect on investments, with only 8% of respondents saying they have significantly pulled back on investing due to inflation rates.
• The impact of geopolitical events on investment strategy jumped from 53% in 2020 to nearly 80% in 2022.
• Only 25% of respondents said their firm has launched programs and initiatives to increase representation of women at both the firm-level as well as portfolio companies.

The survey was completed by 142 global venture capital (VC) investors attending the conference. This is the sixth survey PitchBook and Web Summit have collaborated on and offers a glimpse at how investment strategies have changed following the pandemic and amid market uncertainty, representation of women in VC and sentiment toward emerging technologies like renewable energy and Web3. PitchBook is sponsoring the Investor Lounge at Web Summit, where investors in attendance can work, take meetings and network.

Global VC activity has slowed in 2022 amid market uncertainty. As of September 30, 2022, global investment totaled $394.5 billion and this year, with $194.9 billion in the US and €76.0 billion in Europe. Investors attending Web Summit's portfolios accounted for 30% of global deal value, 31.5% of US deal value and 44.4% of European deal value so far this year. Those managing funds less than $250 million comprised 80% of survey respondents and 20% reported managing funds larger than $250 million.

"It's encouraging to see that many investors continue to put capital to work despite market uncertainty," said Kyle Stanford, lead VC analyst at PitchBook. "Our data has also shown a continuation in heightened levels of fundraising this year, adding further capital into the market to boost investment. While the data does show a decline in investment activity compared to 2021, global dealmaking is still well above historical pace."

"The findings in this survey are incredibly interesting and prove what we've seen on the ground at Web Summit, with more investors and startups than ever before," said Paddy Cosgrave, founder and CEO of Web Summit. "There's so much dry powder that needs to be deployed, it's no wonder that inflation is having such little impact on investments. The majority of dry powder available can't possibly create the type of value that is needed. Everybody is chasing something that doesn't exist anymore, which is a 10-year return."

• Nearly half (47%) of investors reported making between one and five investments in the last twelve months, which is up from 31% in 2021. When considering new investments compared to follow-on investments, 73% of investors have allocated over two-thirds of their current fund for new investments.
• The survey asked about how much geopolitical events impact investment strategy and the answers are quite a shift from 2020. Nearly half (47%) of investors surveyed in 2020 said these events have no impact on investment strategy and 2% said it strongly impacts strategy. This year, only 21% said these events have no impact on investment strategy, while 11% said it strongly impacts strategy.
• Inflation is on the rise across the globe and when asked about the pace investors are making investments compared to before the rise, 35% said they have not made any changes to investment strategy based on inflation and 36% are still investing with some reduction. Only 8% said they have significantly pulled back on investing.
• Looking at the top criterion used to evaluate investment opportunities, the executive team pedigree has taken back the top spot. This time around, 31% of respondents said executive pedigree is most important which was also the case in November 2020. However, in November 2021, business model was ranked first (30%) followed by executive pedigree (22%).

• When asked what percentage of investments made since September 2021 were to women-led startups, two-thirds of investors surveyed said 25%-50% of their investments were to women-led startups. However, 32% said none of their investments in this timeframe were to companies led by women.
• On the investor side, 75% said there is a woman in a senior management position at their firm.
• Nearly half (44%) said they are actively exploring ways to increase representation at the firm-level and in portfolio companies. While 27% said this is not an area of focus at this time, 25% said their firm has already launched programs and initiatives to increase representation at both the firm-level as well as portfolio companies. 

• Two-thirds of respondents said in light of the energy crisis, their investment strategy will move towards renewable energy technologies that address climate change and energy security.
• When asked if the recent crash in cryptocurrencies and other digital currencies impacted deal flow into the Web3 market, 39% said that Web3 is not a part of their firm's investment strategy at this time, while 15% are continuing to invest in Web3. The remaining 46% of investors reported slowing investment in or pulling back entirely from Web3. 
• Investors have had mixed feelings when asked which emerging technology has the potential to be most disruptive in the next five to ten years. Today, the most selected technology was artificial intelligence and machine learning (29%). At Web Summit 2021, investors were most optimistic about blockchain (24%) and at Collision 2022, investors gave fintech the top spot (30%), both of which fell in today's findings to 15% and 8%, respectively.

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PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity and M&A landscape—including public and private companies, investors, funds, investments, exits and people. The company's data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook has offices in Seattle, San Francisco, New York, Hong Kong and London and serves more than 90,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.

In the words of Inc. Magazine, "Web Summit is the largest technology conference in the world". Forbes says Web Summit is "the best tech conference on the planet", Bloomberg calls it "Davos for geeks", Politico "the Olympics of tech", and the Guardian "Glastonbury for geeks".

SOURCE PitchBook