PitchBook News - A first look at 2023 VC data

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The Research Pitch

January 6, 2024

IPO opportunities by vertical: The VC ecosystem is in desperate need of an IPO comeback. Our new research dives into three segments poised to benefit from a return in public listings—SaaS, AI & ML, and fintech. Read it here.

December performance: After strong returns across global markets, 2023 ended on a high. Our report breaks down trends in the equity, debt, and commodities markets, tracking returns across a range of indexes. Read it here.

We're hiring! If you or anyone in your network are looking for research or news opportunities, check out these new job postings out of our New York office:

Sr. Analyst, Private Credit
Reporter, Private Equity

Final data for 2023 illustrates the extent of VC's tough year

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 levels from 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 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 pressure.

For a first look at data from 2023, download our data packs that cover dealmaking, exits, and fundraising: PitchBook Venture First Looks

Best,

Kyle Stanford, CAIA
Lead Analyst, Venture

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Market Updates

PE just limped through its worst year for exits in a decade.

Capital deployed worldwide last year finished 40% below 2021's peak and down 25% on an annual basis.

Our debut PE First Looks precede the release of our upcoming US and European PE Breakdown reports with early access to the data on how far PE activity has fallen:

get the free data

Industry & Tech Research

Despite major policy shifts and renewed public interest, VC activity in semiconductors has been on the decline.

The dollars that are being raised are increasingly going to Asia, as China continues to be the dominant hub for semiconductor investment.

Our latest Vertical Snapshot dives into the data, trends, and tailwinds from a changing policy landscape in the US:

read a free preview

Webinars & Events

PitchBook at JPM 2024

Join us! Our healthcare analyst team will be on-site in San Francisco for the J.P. Morgan Healthcare Conference, which runs next week from Jan. 8-11.

For PitchBook clients, we're hosting an investor lounge on Jan. 9 where you can network, recharge, refuel, and connect with our analysts for in-person discussions around healthcare services and digital health. More details here.

We're also hosting a pair of webinars that are open to all:

Jan. 9: Though multiple biotech subindustries showed promise, setbacks have pushed VC toward new therapeutic applications. Our analyst Kazi Helal will discuss it all with a panel of VC biotech investors. Register here.

Jan. 11: Our team will recap JPM 2024 and share our most important takeaways from the private company-related presentations and discussions. Register here.

Commentary

Senior tech analyst Brendan Burke weighs in on Anthropic being in talks to raise $750 million in a round led by Menlo Ventures that could value the AI giant at $18 billion:

"This proposed deal reflects a continued ramp in commercial scale for generative AI models and valuation support from a financial VC investor at an outlier ARR multiple of nearly 100x for a leading foundation model research lab.

"Anthropic disclosed an ARR target of $200 million by year-end 2023, according to The Information, and benefited from OpenAI's leadership uncertainty at the end of the year to gain customer interest.

"We believe that Anthropic is well positioned to compete with OpenAI by maintaining the company's commitment to ethical AI, limiting dependence on a single cloud provider, and operating with a cleaner governance structure.

"Anthropic's Claude large language model has not reached the performance of GPT-4 yet has stayed ahead of open-source alternatives and benefits from partnerships with AWS and Google Cloud for secure deployment.

"Generative AI unicorns expect to continue high growth in 2024, with OpenAI forecasting 212.5% ARR growth and Anthropic anticipating 325% growth, encouraging financial investors to co-invest with tech giants."

Brendan Burke

Senior Emerging Technology Analyst
AI & Machine Learning

In the News

Our insights and data featured in the press:

"AI knows a lot, but it can't do a lot yet. We’re still far away from AI truly being able to do the complex tasks that people are used to doing in their personal lives and at work." [CNBC]

The value of venture capital deals in the US last year fell to levels not seen since 2019. [Bloomberg]

Last year, private equity exits hit their lowest point in over a decade. [Citywire]

"A lot of these [VC-backed] companies that are still private will still struggle, we’ll see a lot more down rounds and a struggle to exit." [FT]

When it comes to female founders trying to raise VC, the data shows not much has changed. [CNBC]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

More of our recent research (* - report preview):

2024 Outlooks

Market updates

Thematic research

Industry & tech research

Credit research

Coming next week (subject to change)

US PE Breakdown
PitchBook-NVCA Venture Monitor
PitchBook Benchmarks
Mobility Tech: Annual Overview
Comp Sheets: Fintech, Enterprise SaaS, AI & ML, Mobility, Agtech, Foodtech, Gaming

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PitchBook News - A first look at 2023 VC data

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