Q4'23 Global VC Deals Hit Lowest Levels Since Q3'16, Despite Sustained Interest In AI

Global Venture Capital (VC) investments sank from $531.4 billion across 51,894 deals in 2022 to $344 billion across 37,808 deals in 2023 amidst a thematic backdrop of geopolitical, macro-economic, and other challenges, including geopolitical conflicts, high interest rates and inflation, a parched exit environment, and ongoing concerns related to start-up valuations, Q4’23 edition of KPMG Private Enterprise Venture Pulse report observed.   

The report, published quarterly, highlighted that America accounted for more than half of VC investment this year ($183.6 billion), while the Asia-Pacific region attracted $92.4 billion and Europe $62.3 billion, last year. READ MORE

Navigating the VC Highway: How Savvy Founders Take the Driver’s Seat in Investor Relationships

When it comes to securing funding for their ventures, many founders are focused on one thing: money! While obtaining financial support is undoubtedly critical, it’s not the only consideration, and in fact, it’s just the beginning. When taking on investors, founders must consider various other factors, such as diversity, industry experience, regional connections, shared values and vision, and relationships with other investors. Unfortunately, many founders accept funding without conducting the same level of due diligence that investors conduct on them. This can lead to a mismatch between what the founder needs and what the investor can offer, which may ultimately jeopardize the entire venture. READ MORE

Many Boom Time Startup Acquisitions Have Worked Out Badly

Buying a startup can work out very well. Just ask Meta about its Instagram purchase in 2012 or let Google tell you about its $50 million acquisition in 2005 of a little company called Android.

But while success stories happen, it’s also true that many purchases work out badly. Acquirers might find they overpaid, face regulatory backlash, failed to scale the business, or have determined it isn’t a strategic fit. READ MORE

Private equity fundraising's big slide; pension funds' quiet 2023

The numbers are in on private equity's 2023 fundraising performance, and they show that investor commitments to funds fell to their lowest level since 2017.

The poor showing is a symptom of private equity's strained investment cycle. Exits from portfolio company investments have been relatively scarce over the past two years — at least compared to the record levels achieved in 2021 — throttling the flow of distributions back to investors. READ MORE

Private equity could be the last resort for startups struggling to exit

After watching Lucy pull the football from Charlie Brown’s foot at the last possible moment time and time again, we have learned our lesson and are therefore hesitant to believe that 2024 will be the year of the IPO market’s return. It may or may not happen, but we’re not betting on it.

Alternative sources of liquidity are therefore top of mind — there’s a towering pile of private companies in need of an exit, or a bailout. Recent research from Cowboy Ventures’ Aileen Lee underscores how quickly illiquid wealth was accumulated in the private markets in the last decade, and how rare exits have become for unicorns and other richly valued startups. READ MORE

VC bust? Time to return to fundamentals in 2024

Venture capitalists (VC) and startup founders will remember 2023 as the year the party ended. After years of record investments and outsized returns fueled by ultralow interest rates, 3,200 U.S. private venture-backed companies — mostly tech startups — went out of business last year. Collectively, the companies had raised $27.2 billion in venture funding. If history is any indicator, the collapse is just beginning. READ MORE

Venture Capital's New Era

In the ever-evolving landscape of venture capital, artificial intelligence (AI) has emerged not just as a tool but as a transformative force, redefining the parameters of investment strategies and operational efficiency. At the heart of this revolution lies the insightful perspectives of thought leaders like Dr. Mohammad Rasouli, an AI researcher from Stanford University and a consultant in guiding institutional investors through the intricacies of AI for alternative investments with his Bay Area tech company AIx2. READ MORE

4 charts: 2023's VC investor pullback

VCs and their portfolio companies took a bruising in 2023. From Silicon Valley Bank collapsing—and with it a vital lifeline for startups—to a frozen IPO environment closing off exit activity, this past year was one of the most challenging to date.

In response, investors pulled back, leading to chilling effects on the startup market, the latest PitchBook-NVCA Venture Monitor shows. As more investors opted to sit out 2023, companies contended with less favorable deals.

These four charts highlight the effects of the investor exodus. READ MORE

From Batteries To Building Materials, Green Manufacturing Startups Are Raising Billions

Modern humanity’s carbon-spewing ways probably have their roots in manufacturing. If it’s not the things we mass-produce, then it’s likely the processes used to make them. Or, in many cases, both are to blame for emitting copious quantities of CO₂.

Given this state of affairs, it’s not surprising that founders and venture capitalists have taken an interest in greener manufacturing. The space emerged as a popular theme, even amid a toned-down funding climate last year, with more than $10 billion invested globally across the larger rounds, per an analysis of Crunchbase data. READ MORE

Large Backers of Private Equity Are Asking For Their Money Back

Sovereign wealth funds and state pension providers are among investors telling money managers they’ll only commit in their upcoming fund raises if their capital tied up in old funds is released, according to people with knowledge of the matter.

Additional requests range from fee discounts and more co-investment opportunities, to greater information rights and representation on committees, the people said, asking not to be identified because the requests are private. Some are even asking for a cut of the fund’s management fee or an opportunity to buy a stake in the fund manager, the people added. READ MORE

A 5-Step Survival Guide to Fundraising for a Niche Industry

The global venture capital (VC) market is going through an undeniably rough phase caused by a seemingly unending stream of economic and geopolitical issues, simultaneously occurring across all corners of the globe. According to KPMG's "Venture Pulse Q3 2023" report, worldwide VC investment dropped to a sixteen-quarter low in Q3 2023. Many market players feel concerned by the historically high number of down rounds, the overall slowdown in the speed of VC deals and the protracted lack of exit opportunities.

Based on CB Insights' "State of Venture Q3 2023" report, 9M of 2023 showed the lowest results in the amount of funding received by startups since the same period in 2019. The number of deals is also slightly lower: 21,216 deals during 9M of 2023 versus 22,992 deals within the same time frame in 2019. READ MORE

A16z Tops Active Investor Ranks In Slow Year

Overall, startup investors put far less money to work in 2023 compared to the prior two years. They also did far fewer deals.

However, some investors slowed down much less drastically than others. The result is that these firms, which include prominent cross-stage investors such as Andreessen Horowitz (a16z), Lightspeed Venture Partners and Bpifrance, reigned as the most-active venture investors of 2023, per Crunchbase data. READ MORE

The VC Funding Party Is Over

“It might be the best time for any kind of business in any industry to raise money for all of history, like since the time of the ancient Egyptians,” an excitable Stuart Butterfield, CEO of Slack, told Farhad Manjoo in The New York Times in 2015.

This was no exaggeration. While interest rates remained close to zero, venture capital funds raised more money than ever and exited their investments at some of the highest valuations ever witnessed. READ MORE

The search for better unit economics prompts consumer tech investors to shift focus

A slew of consumer tech and companies focused on consumer packaged goods (CPG) have gobbled up venture capital in the past year. Keychain, Harmonya, Highlight, Ramani, SupplyPike, Vividly and Turing Labs, just to name a few, captured investor attention for their technologies.

Companies weren’t the only ones getting funding. Investor firms focused on consumer and CPG were, too. That includes VMG Catalyst, Alethia and Humble Growth. READ MORE

Venture Debt: Poison For Startups Or The Antidote To The VC Drought?

“Do you think companies in Silicon Valley should take more debt?” Chamath Palihapitiya, Founder of Social Capital, asked me bluntly during an interview in Mountain View a few months ago.

We were at the headquarters of one of Chamath’s most promising climate tech startups – Mitra Chem – perched awkwardly around a table on the factory floor surrounded by millions of dollars of state of the art equipment. We were discussing Mitra Chem’s eye-watering $40 million Series B. READ MORE

After A Turbulent Few Years, Venture Should Steady In 2024

For the past handful of years, the venture market has been on a wild ride. From the cheap money days of 2020 and 2021 to the market recalibration in 2022 to some rocky times in 2023, the private market has had its ups and downs.

However, venture capitalists view 2024 pretty optimistically — although with caveats — with funding likely already hitting its low, the exit markets coming back, and a coming to terms with the new normal of work. READ MORE