Key Points:
- Venture capital (VC) deal activity was weak in 2023, with global VC investments reaching the lowest levels since 2019.
- In the U.S., just $170.6 billion was invested into companies in 2023, highlighting the shortage of capital availability for private companies.
- Large tech initial public offerings (IPOs) were sparse, limiting the ability to return money to investors.
- VC fundraising was sluggish in 2023, with just $66.9 billion committed to VC funds in the U.S., the lowest total since 2017.
- In Europe, dealmaking also declined, with the lowest total exit value in a decade.
- Asia-based companies saw a decline in fundraising, with the lowest total since Q2 2019.
A report by Pitchbook and National Venture Capital Association (NVCA) reveals that 2023 was a weak year for VC investments and exits. In the U.S., 15,766 deals were completed, but only $170.6 billion was invested into companies, which is roughly half of the amount invested in 2021. This highlights the shortage of capital availability for private companies. Additionally, U.S. exits returned just $61.5 billion to investors during the year. Large tech IPOs were particularly sparse, despite the high number of unicorns that remain private.
VC fundraising was also sluggish in 2023. After a record year for closed funds in 2022, just $66.9 billion was committed to VC funds in the U.S., the lowest total since 2017. This will likely hamper a potential rebound in dealmaking in the new year, as investors have become more cautious when deploying capital to new portfolio companies.
European Union numbers also showed weak results in 2023. Deal count and exit value fell, with the lowest annual exit value in a decade. The number of fund closings in Europe also decreased, marking the first year since 2013 to see fewer than 200 VC funds close. The $17.7 billion in commitments is also the lowest total since 2018.
Globally, VC exits were weak in 2023. Global VC deals saw less than $77 billion invested in Q4, the lowest total since Q2 2019. Asia-based companies failed to raise at least $20 billion in a quarter, marking a decline of more than 70% from the high in 2021. Deal counts fell across all regions, indicating a search for a new normal in the venture market.
Overall, 2023 was the lowest year for global VC fundraising since 2015, with just $160 billion raised by VCs during the year. This is more than $200 billion less than in 2021, which adds to the low capital availability within the venture market moving forward.
