Preliminary data from PitchBook reveals that the global venture capital market is currently facing a slump, contrary to expectations following the success of some highly anticipated tech IPOs in the United States and the slowdown in interest rate hikes. Despite hopes for a potential boost in venture investments, trends instead took a nosedive.
Key Takeaway
The global venture capital market is currently experiencing a decline, with venture deal volume continuously decreasing for several quarters. The stagnation in the VC market can be attributed to various factors, including the struggles in the web3 investment space and the challenging environment for startups to secure funding. However, Europe has shown a slight improvement in deal volume amid the global decline.
Trouble in the Web3 and Startup World
Unsurprisingly, investment in web3 projects is also facing difficulties. Startups worldwide are finding it increasingly challenging to secure capital, with raising funds becoming more challenging than it has been in recent years.
Although there are exceptions to this trend, with venture investors quick to point out that promising companies can always secure funding, the same cannot be said for the wider startup ecosystem. However, startups in the AI sector seem to be defying the odds by raising money at a pace and scale that goes against the downward trend.
A Silver Lining in Europe
Fortunately, there is some positive news amid the global decline. Europe, in particular, has seen a slight upswing in numbers after a period of lows. While venture deal volume has consistently decreased worldwide since the second quarter of 2022, Europe stands out as an exception.
However, it is important to note that this decline is significant. In the third quarter of 2023, there were only 7,434 deals compared to the previous quarter’s 9,563. It’s worth considering that there may be a reporting lag, and some deals may not have been accounted for yet. PitchBook provides an estimated deal count to bridge this gap. When combining the actual and estimated deal counts, it is evident that more deals were closed in Q1 2023 than in Q4 2022, albeit by a narrow margin. Regardless, Q3 2023 marks the second consecutive quarter to see a decline in deal counts and the lowest number of deals since Q3 2020.
