Final data for 2023 illustrates the extent of VC's tough year
January 6, 2024
2023 just wasn't the year for venture capital.
The market declined in almost every phase, and small narrative shifts throughout the year never seemed truly backed by a momentum swing in deals, exits, or fundraising.
The VC sluggishness last year wasn't a uniquely US phenomenon; it generally encompassed the global market. Deal value for the year was less than 50% of the total from 2021, returning to capital invested totals of 2018-2020.
Global exit value during 2023 was just $225 billion—roughly the combined value of the Uber, Facebook, and Coinbase public listings—marking the lowest annual total since 2017.
It's likely that the hardest part of the slowdown hasn't yet occurred. We know down rounds are increasing, and a few high-profile companies have gone out of business, but there are many more companies running toward the end of their runway, and capital availability isn't getting better as global fundraising fell to the lowest level since 2015.
A bright spot may be that public markets, at least through Q4, seemed to have a small bounce-back. In particular, US small and mid-cap indices showed some positive performance, and recently public VC-backed companies showed a bit of multiple expansion. Both are potential, albeit slight, signals that investor interest is returning as some uncertainties begin to dwindle.
2024 won't be a make-or-break year for VC by any means. Dry powder is still stacking, startups are still receiving investment, and sentiment on the future of venture capital remains high. But there are challenges ahead for many companies and investors as exit markets seem unlikely to help release the pressure on the private markets.
For a first look at data from 2023, download our data packs that cover dealmaking, exits, and fundraising: PitchBook Venture First Looks
The market declined in almost every phase, and small narrative shifts throughout the year never seemed truly backed by a momentum swing in deals, exits, or fundraising.
The VC sluggishness last year wasn't a uniquely US phenomenon; it generally encompassed the global market. Deal value for the year was less than 50% of the total from 2021, returning to capital invested totals of 2018-2020.
Global exit value during 2023 was just $225 billion—roughly the combined value of the Uber, Facebook, and Coinbase public listings—marking the lowest annual total since 2017.
It's likely that the hardest part of the slowdown hasn't yet occurred. We know down rounds are increasing, and a few high-profile companies have gone out of business, but there are many more companies running toward the end of their runway, and capital availability isn't getting better as global fundraising fell to the lowest level since 2015.
A bright spot may be that public markets, at least through Q4, seemed to have a small bounce-back. In particular, US small and mid-cap indices showed some positive performance, and recently public VC-backed companies showed a bit of multiple expansion. Both are potential, albeit slight, signals that investor interest is returning as some uncertainties begin to dwindle.
2024 won't be a make-or-break year for VC by any means. Dry powder is still stacking, startups are still receiving investment, and sentiment on the future of venture capital remains high. But there are challenges ahead for many companies and investors as exit markets seem unlikely to help release the pressure on the private markets.
For a first look at data from 2023, download our data packs that cover dealmaking, exits, and fundraising: PitchBook Venture First Looks
Kyle Stanford, CAIA
Lead Analyst, Venture
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