The value of global venture capital-backed funding rounds fell 65.6% year over year in July to $21.78 billion, while the number of rounds was down 32.1%, according to S&P Global Market Intelligence data.

The amount raised in July is the lowest since April 2020, when $19.69 billion was pulled in, the data shows.

Companies based in the U.S. and Canada received $9 billion in 408 funding rounds, Asia-Pacific drew $6.6 billion in 506 transactions, and Europe secured $5.2 billion in 329 rounds.

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TMT sector continues to lead

The technology, media and telecommunications sector attracted the largest share of the capital raised in July at 39.8%, followed by the healthcare and financial sectors with 16.2% and 14.8%, respectively.

"The high-tech sector is facing a perfect storm of an industry-specific correction, inflation, and looming recession. As a result, valuations, which many industry watchers felt were optimistic to begin with, have started falling," said Bruce Daley, senior research analyst at 451 Research.

"This reverse bubble is forcing some quality businesses to the surface at enticing valuations. A few forward-looking [venture capital firms] are only too happy to jump on them and this moves the market."

Software development company Zendesk Inc., which in June agreed to a buyout price of $9.9 billion, a roughly 38% discount to the approximately $16.05 billion private equity bid it turned down in February, is one example, he said.

July's top funding rounds

The largest funding round in July was fintech firm Klarna Bank AB’s $800 million round. Canada Pension Plan Investment Board, Sequoia Capital Operations LLC and Mubadala Investment Co. PJSC were among the investors in the round.

Software company Content Square SAS raised $600 million in a funding round with the participation of BlackRock, Eurazeo, KKR and several others.

Real estate tech platform Casavo Management was in the third spot, raising $409.6 million from private equity firms including 360 Capital Partners, Picus Capital and Project A Ventures.