National Startup Day: Funding winter chill continues, global VC investments declined 38% in Q42023
VC Funding Winter: After years of record-breaking growth, global venture funding crashed in 2023, hitting a six-year low of $248.4 billion. This represented a staggering 38 per cent decline year-over-year and the lowest level since 2017. Venture capital (VC) funding investment in Indian startups decreased by almost one-third in comparison to the funding received in CY22, which amounted to USD 20.6 billion and constituted 4.8 per cent of the global total, according to CB Insights' global data.
While there were 71 new unicorns globally, with 21 emerging in Asia. India only added two unicorns, a notable decrease from CY22 when it saw the emergence of 22 unicorns. Deal volume tumbled 30 per cent to 29,303, impacting most major regions and sectors.
Even the traditionally resilient fintech and retail tech sectors saw only modest gains in Q4 2023. The US, once a VC powerhouse, felt the chill most acutely. Deal volume in Q4'23 shrank by 21 per cent quarter-over-quarter, reaching a 10-year low.
In total, US-based companies managed only 2,182 equity deals throughout the quarter, a far cry from the boom times of just a few years ago. Silicon Valley retained its lead position, but US deal volume reached a 10-year low in Q4 2023. Investors are shifting to early-stage companies, with early-stage deals now accounting for a record 65 per cent of US activity.
Venture investors are now being much more sparing with their dry powder than they were in the FOMO-driven tech boom of 2021/early 2022. They’ve also doubled down on due diligence, which is driving up the time it takes to close any one deal, the report explained. Investors are also shifting their portfolios toward early-stage companies.
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