Report: global VC funding, propped up by mega deals, rose 3% from previous quarter to 27.4B in Q2 but number of deals fell by 6% to 1886, lowest since Q2 2013
If you look at the investment dollars for the last quarter, you might be surprised to see an uptick in deal volume.
Context & Ripple Effects
This Q2 2016 report is an early sighting of a pattern the coverage keeps confirming: headline dollar volume holding up while the number of checks shrinks. Dollars rose 3% to $27.4B only because mega deals carried the quarter, while deal count fell 6% to 1,886 — the lowest since Q2 2013.
The same divergence reappears throughout the related coverage: US funding hit a record $130B in 2020 even as deal count fell for a second straight year, and by 2023 quarterly totals had collapsed toward $76B with late-stage rounds like OpenAI's and Stripe's dominating what remained (Q1 2023's $76B quarter). The 2016 quarter is where the concentration story starts being visible in the data.
First-order effects
- Founders raising outside the mega-deal tier face a thinning market: with total dollars flat-to-up but 6% fewer deals, capital is being allocated to fewer, larger rounds rather than spread across the pipeline.
Second-order effects
- Firms competing for the shrinking pool of non-mega deals must either write bigger checks into fewer companies or cede early-stage share to those willing to concentrate — pushing valuation premiums toward whatever sector is drawing the mega rounds.
Third-order effects
- If the pattern holds, venture structurally bifurcates into a barbell: a small set of very large rounds absorbing most dollars atop a shrinking base of smaller deals — exactly the trajectory the later coverage shows through 2020's record-dollars/fewer-deals print and the 2022–23 contraction.
The trend: Venture capital is steadily concentrating dollars into fewer, larger rounds, so headline funding totals increasingly mask a shrinking breadth of deal activity.