Hopes for a more favorable environment for startups to secure funding in 2023 were dashed as the year drew to a close. New data from PitchBook reveals a less-than-rosy picture of venture capital investment activity in the fourth quarter of 2023.
Key Takeaway
2023 saw a downturn in venture capital investment activity, with the lowest quarterly deal value and count in several years. However, there is a glimmer of hope for young startups, as the data indicates a relatively better performance for seed-stage fundraising.
The State of Venture Capital in 2023
According to PitchBook’s preliminary findings, startups in the U.S. managed to secure 2,879 rounds of funding amounting to approximately $37.5 billion in the last quarter of 2023. These figures represent the lowest quarterly deal value since Q3 2019 and the lowest deal count since Q4 2017. The overall trend indicates a decline in venture capital investment activity across different stages, with the total capital invested in U.S. startups in 2023 falling short of the 2020 figures.
A Silver Lining for Young Startups
Despite the general decline in venture capital investment, there is an intriguing finding in the data. While there was a decrease in the number of seed deals, the youngest startups seem to be faring relatively better compared to their counterparts. Notably, the median deal value at the seed stage in 2023 matched the $3 million record set in 2022. Moreover, the average value of U.S. seed deals rose to $1.3 million last year, a level last observed in 2006.
