New PitchBook Survey Reveals Venture Investors Bullish on AI and Cautious on Fundraising
Survey Highlights Technology and VC Ecosystem Expectations Amid Economic Uncertainty
- Over the next 12 months, survey respondents were the most bullish on AI being the largest driver of innovation (31.6%) and growth opportunities (36.1%). Over two-thirds of investors surveyed (70.7%) also believe it’s likely that generative AI will spawn a new wave of technology unicorns over the next five years. PitchBook’s recent 2023 Generative AI Vertical Snapshot expects the global generative AI market to reach $42.6 billion in 2023.
- Following AI, climate tech and biotech were also considered significant sources of innovation, with 20.4% and 12.5% of investors expecting the most innovation in the next 12 months, respectively.
- Respondents identified enterprise technology (30.8%), fintech (21.7%) and e-commerce (20.8%) as areas likely to experience disruptive and competitive pressures from startups over the next 12 months.
- When considering the ‘Tech Wreck’ of 2022, respondents were split down the middle in how they viewed its impact on the pace of technological innovation, with 49.1% viewing the impact as positive and 50.9% viewing it as negative.
- When asked how VC funding will change over the next 12 months, nearly half of respondents (43.1%) said they expect either a moderate or strong decrease in VC funding, while 32.8% said they expect funding levels to remain the same.
- Nearly two-thirds of participants (61.6%) said they believe SVB’s failure would contribute to reduced funding over the next year.
- Over three-fourths of respondents (77.6%) said they expect valuations to get more attractive over the next year, indicating the group still sees some downside to the market. Despite lower valuations, 63.8% of respondents said they are largely still acquiring similar size stakes in VC rounds.
- Investors signaled a marginal degree of optimism related to fundraising, with most saying fundraising plans have not changed (41.3%) and indicating they expect 2023 to be a strong vintage year for fund performance (43.1%). The group noted that targeted tech funds are easier to raise relative than generalist funds, and largely agreed that in the current environment, a startups’ path to profitability was the most important factor in determining whether to invest.