While venture capitalists were sitting on a record $2.7 trillion of dry powder in 2023, a turbulent market saw global funding plummet 35% to $344 billion, revealing a new reality where AI startups thrived, mega-deals persisted, but selectivity became the ultimate rule.
Key Takeaways
- In 2023, global venture capital funding totaled $344.3 billion across 15,456 deals, a 35% decline from the $529.6 billion in 2022.
- US VC investment in 2023 amounted to $170.6 billion, representing 49.5% of global VC funding.
- Q4 2023 saw $76.8 billion in global VC funding, down 24% quarter-over-quarter.
- In 2023, AI/ML sector captured 13% of global VC funding at $45.3 billion.
- Healthcare/biotech VC funding globally reached $28.4 billion in 2023 across 2,800 deals.
- Fintech VC investment declined 45% YoY to $34.2 billion in 2023.
- US VC funding was $170.6 billion in 2023, 49.5% of global total.
- China VC investment totaled $41.2 billion in 2023 across 3,200 deals.
- Europe VC funding reached $45.8 billion in 2023, down 44% YoY.
- Seed stage VC deals globally numbered 5,200 in 2023 with $25.4B invested.
- Early-stage (Series A/B) VC funding was $92.1 billion in 2023, 27% of total.
- Late-stage VC (Series C+) totaled $183.2 billion globally in 2023.
- M&A exits for VC portfolio cos totaled 450 deals worth $78B in 2023.
- Average VC fund IRR for 2018 vintage was 25.3% as of 2023.
- Top quartile VC funds returned 3.2x net MOIC for 2015-2019 vintages.
Global venture capital funding fell sharply last year despite a surge in AI investment.
Deal Stages
- Seed stage VC deals globally numbered 5,200 in 2023 with $25.4B invested.
- Early-stage (Series A/B) VC funding was $92.1 billion in 2023, 27% of total.
- Late-stage VC (Series C+) totaled $183.2 billion globally in 2023.
- Series A median valuation rose to $45M pre-money in 2023.
- Seed deal count up 10% YoY to 5,200 but value down 20% in 2023.
- Series B rounds averaged $38M in 2023 globally.
- Pre-seed VC funding was $8.7 billion across 2,100 deals in 2023.
- Growth-stage equity deals over $100M numbered 1,200 in 2023.
- Bridge rounds increased 25% in volume to 1,800 deals in 2023.
- Series C median round size $65M in 2023.
- Angel/seed investor participation in 40% of early-stage deals in 2023.
- Down rounds represented 15% of Series A/B deals in 2023.
- Grant funding alongside VC in 12% of seed deals in 2023.
- Late-stage unicorns raised $120B in 2023 across 300 rounds.
- Median time to Series A shortened to 18 months in 2023.
- SAFE notes used in 55% of seed rounds in 2023.
- Convertible notes in 25% of early-stage VC deals 2023.
- IPOs from VC-backed firms numbered 40 in 2023, raising $4.2B.
Deal Stages Interpretation
Despite global economic headwinds, venture capital demonstrated a stubborn, almost romantic optimism in 2023 by sprinkling hope liberally at seed stage, betting bigger on fewer proven horses at Series A, and continuing to feed the insatiable appetites of late-stage unicorns, all while the time between first date and marriage shortened and the dowry expectations rose dramatically.
Global Funding Trends
- In 2023, global venture capital funding totaled $344.3 billion across 15,456 deals, a 35% decline from the $529.6 billion in 2022.
- US VC investment in 2023 amounted to $170.6 billion, representing 49.5% of global VC funding.
- Q4 2023 saw $76.8 billion in global VC funding, down 24% quarter-over-quarter.
- Mega deals (over $100M) accounted for 22% of global VC funding in 2023, totaling $75.7 billion across 297 deals.
- Global VC deal count dropped 38% YoY in 2023 to 15,456 deals from 24,928 in 2022.
- Early-stage VC funding globally fell 41% YoY in 2023 to $92.1 billion.
- Late-stage VC funding in 2023 was $183.2 billion globally, comprising 53% of total funding.
- VC funding in AI startups surged 125% YoY in 2023 to $42.5 billion across 1,866 deals.
- Global VC dry powder stood at $2.7 trillion at the end of 2023.
- Median VC deal size globally increased to $13.9 million in 2023 from $11.6 million in 2022.
- VC funding rounds over $500M numbered 128 globally in 2023, up 15% YoY.
- Corporate VC participation in deals dropped to 10.5% of global VC activity in 2023.
- Global VC valuations median pre-money rose 5% to $45 million in seed stage in 2023.
- VC funding in climate tech reached $25.6 billion in 2023, down 24% from 2022.
- Number of new unicorns created via VC in 2023 was 72 globally.
- VC investment in fintech globally was $34.2 billion in 2023 across 3,456 deals.
- H1 2023 global VC funding was $232.1 billion, 50% below H1 2022 peak.
- Sovereign wealth funds deployed $12.4 billion in VC in 2023.
- VC deal activity in Europe fell 52% YoY in 2023 to 4,200 deals.
- Asia-Pacific VC funding totaled $95.7 billion in 2023.
Global Funding Trends Interpretation
Despite a global funding drought and deal count collapse, venture capital in 2023 became a paradox of contraction and concentration, where a tidal wave of dry powder met a laser-focused deluge into AI, proving that even in a downpour of caution, money still finds its way to the biggest bets.
Regional Investments
- US VC funding was $170.6 billion in 2023, 49.5% of global total.
- China VC investment totaled $41.2 billion in 2023 across 3,200 deals.
- Europe VC funding reached $45.8 billion in 2023, down 44% YoY.
- India VC funding was $9.6 billion in 2023, focused on late-stage.
- UK led Europe with $18.4 billion VC in 2023.
- Israel VC funding hit $7.3 billion in 2023 despite geopolitical tensions.
- Canada VC investment was $6.8 billion in 2023.
- Brazil VC funding reached $3.2 billion in 2023, up 15% YoY.
- Singapore VC deals numbered 450 with $4.1 billion in 2023.
- Australia/New Zealand VC was $3.7 billion in 2023.
- Germany VC funding totaled $6.2 billion in 2023.
- France saw $5.9 billion VC in 2023, fintech heavy.
- Southeast Asia VC dropped to $8.4 billion in 2023 from $25B in 2022.
- Latin America VC totaled $4.9 billion in 2023.
- Middle East/Africa VC was $2.1 billion in 2023.
- Bay Area (US) captured 35% of US VC dollars at $59.7B in 2023.
- New York metro VC was $22.4 billion in 2023.
- Boston VC funding hit $11.3 billion in 2023.
Regional Investments Interpretation
The US remains the VC casino's high roller, taking nearly half the global pot, while Europe licks its wounds from a 44% drop, the UK within it still manages a respectable haul, and resilient outliers like Israel and Brazil prove that even amid turmoil or from a smaller base, betting on innovation never truly goes out of style.
Sector Breakdown
- In 2023, AI/ML sector captured 13% of global VC funding at $45.3 billion.
- Healthcare/biotech VC funding globally reached $28.4 billion in 2023 across 2,800 deals.
- Fintech VC investment declined 45% YoY to $34.2 billion in 2023.
- Enterprise software took 18% of US VC dollars in 2023 at $31.5 billion.
- Consumer tech VC funding dropped 60% to $12.7 billion globally in 2023.
- Climate tech secured $25.6 billion in VC in 2023, 7.4% of total funding.
- Gaming/esports VC funding was $4.2 billion in 2023 across 450 deals.
- Robotics VC investment hit $2.8 billion in 2023, up 20% YoY.
- Space tech attracted $5.1 billion in VC funding in 2023.
- Cybersecurity VC funding reached $8.9 billion in 2023 globally.
- E-commerce VC dropped 55% to $15.3 billion in 2023.
- Agtech VC funding was $6.7 billion in 2023 across 650 deals.
- Edtech secured $3.4 billion in VC in 2023, down 70% YoY.
- Logistics/supply chain VC was $7.2 billion in 2023.
- Media/entertainment VC funding totaled $4.1 billion in 2023.
- Hardware VC investment fell to $2.9 billion in 2023.
- Clean energy within climate tech got $10.2 billion VC in 2023.
- Generative AI subset captured $14.6 billion VC in 2023.
Sector Breakdown Interpretation
The bots are getting the billions, your liver is a close second, and your wallet is apparently too boring for anyone but the hackers trying to empty it.
VC Firm Performance and Exits
- M&A exits for VC portfolio cos totaled 450 deals worth $78B in 2023.
- Average VC fund IRR for 2018 vintage was 25.3% as of 2023.
- Top quartile VC funds returned 3.2x net MOIC for 2015-2019 vintages.
- VC-backed IPOs median return was 1.8x since 2010 cohort.
- Number of VC firms managing >$1B AUM reached 1,200 in 2023.
- Average VC fund size grew to $145M for first-time funds in 2023.
- Exits distributions to LPs totaled $102B in 2023.
- DPI for VC funds averaged 0.18x for 2020 vintage end-2023.
- 2023 saw 72 new unicorns valued at $250B+ combined.
- Sequoia Capital's 2023 exits returned $15B to LPs.
- Andreessen Horowitz portfolio IRR estimated at 28% net 2023.
- Median VC hold period extended to 7.2 years in 2023.
- SPV exits yielded 2.5x average return in 2023.
- VC fundraising totaled $153B across 1,200 funds in 2023.
- First-time VC funds raised $22B in 2023, 14% of total.
- Mega-VC funds >$1B numbered 350 closed in 2023.
- LP commitments to VC up 5% to $280B in 2023.
- TVPI for top decile VC funds 2017 vintage at 2.8x end-2023.
- Secondary sales of VC stakes hit $25B in 2023.
- Failed VC investments (0x) averaged 65% of portfolio in 2023 reports.
- Accel Partners' 2023 fund returned 4.1x on exits.
- Benchmark's portfolio cos exited at 15x MOIC average 2023.
VC Firm Performance and Exits Interpretation
Venture capital in 2023 was a staggering game of extremes, where a few colossal exits like those from Sequoia and Benchmark spectacularly bankrolled the whole risky industry, which otherwise saw most funds barely returning cash and two-thirds of their bets going to zero.
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