TLDR:
- Venture capital funding in 2023 experienced significant declines and challenges. Deal volume and funding totals reached six-year lows, with the fourth quarter being particularly challenging
- The exception to the decline was seen in fintech and retail tech, which saw minor funding gains in Q4
- Late-stage deal sizes have shrunk by over 50% since 2021, with the median size of a late-stage deal falling to $21 million
- V.C.-backed initial public offerings (IPOs) in 2023 also saw significant declines, with the fewest annual V.C.-backed IPOs since 2013
- Unicorns were hard to come by, with only 71 new unicorns created in 2023, marking a seven-year low and a 73% decline from 2022
- Generative A.I. and sustainability tech attracted investors, making up the majority of the top deals in Q4
Inflation has dropped, interest rates are expected to decrease, and unemployment rates remain low, providing optimism for the venture capital industry in 2024. Furthermore, supply chains have been strengthened, demand for new housing continues to rise, and the U.S. government is incentivizing the onshoring of new semiconductor fabrication facilities. These factors suggest a favorable investment environment for venture capital.
