Equity How can venture capital survive a three-year liquidity drop?
Jan 27, 2024
Gené Teare, Senior Data Editor at Crunchbase News, returns to analyze the latest venture capital trends as 2023 wraps up. She discusses a dramatic 40% drop in funding, particularly in early-stage investments. Despite the downturn, AI startups showcase resilience and continue to attract considerable capital. Gené contrasts this with the waning interest in Web3 and highlights the evolving metrics of success. The conversation also dives into unicorn fundraising dynamics and the implications for the M&A market in 2024.
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2023 Venture Funding Decline
- 2023 saw the lowest venture funding since 2018, totaling $285 billion globally.
- This represents a nearly 40% drop year-over-year and a significant decline from the 2021 peak of $660 billion.
Stage-Specific Funding Trends
- Early-stage funding dropped over 40%, late-stage 37%, and seed just over 30%.
- Series A funding became tougher to secure, pushing investors towards seed-stage deals.
Seed-Stage Appeal
- Investors favor seed-stage deals for cleaner cap tables and higher growth potential.
- Seed valuations remain high, but increased conviction leads to better company quality.