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New PitchBook Survey Reveals Venture Investors Bullish on AI and Cautious on Fundraising

May 1, 2023

Survey Highlights Technology and VC Ecosystem Expectations Amid Economic Uncertainty
 
SEATTLE, May 1, 2023 -- PitchBook, the premier data provider for the private and public equity markets, today released the findings from a new survey conducted by PitchBook’s Institutional Research Group. The H1 2023 VC Tech Survey was administered to 58 venture capital (VC) investors across various industries and a wide range of fund sizes. The survey coincided with two significant events that are likely to have profound impacts on the VC industry – the frenetic adoption of ChatGPT and the collapse of Silicon Valley Bank (SVB). PitchBook’s survey indicates that the VC community is very bullish on the impacts of artificial intelligence (AI); anticipates further declines in VC funding, partly because of SVB’s collapse; and expects valuations to become more attractive over the next year.

“The timing of this survey has allowed us to see investors perspectives on the effects SVB’s undoing has had, which is likely to have lasting ripple effects on startups seeking capital,” said Paul Condra, lead emerging tech analyst at PitchBook. “It’s also notable the extent to which our survey participants view generative AI as a disruptive force, a trend that could spark more deal-making as investors seek more exposure to AI-related opportunities."

To download the survey findings, click here. Key findings include:

Technology Expectations
  • 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.

VC Ecosystem Expectations
  • 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.

For more information about PitchBook, click here.

About PitchBook
PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity and M&A landscape—including public and private companies, investors, funds, investments, exits and people. The company's data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook has offices in Seattle, San Francisco, New York, London, Hong Kong and Singapore and serves more than 90,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.
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