Q1 2023: Deal counts down amid continued market pressure, deal value stays relatively strong

Venture capital (VC) activity continued to decline in the first quarter of 2023, according to data from Pitchbook-NVCA Venture Monitor Q1 2023. Total deal count declined, with exit count and venture-growth also slowing, and angel and seed activity hitting a 10-quarter low. The difficulties facing the market grew with tensions from the continuation of the Russian-Ukrainian war, the collapse of Silicon Valley Bank, and high inflation rates.

Pitchbook reports a total observed deal count of 2,856 across angel, seed, and VC with a total deal value of $37 billion, the second lowest quarter deal value since Q3 2018, which was $35.1 billion, and lowest deal count since Q1 2013, which was 2,460. 

Of the 2,856 total observed deals, 971 were angel and seed deals, 825 early-stage VC, 894 late-stage VC and 166 venture growth deals. This is a decline in deal counts across all equity investing stages, with an all-time high reached in Q1 2022. The decline may in part be due to more recent deals being less likely to have been made public and the decline may become less significant once more data is collected. Further, Pitchbook notes that estimated Q1 deal counts remain above 2020 quarterly figures. 

As for regional deal counts, the Bay Area’s share of deal counts fell below 20%, which could be due in part to the collapse of Silicon Valley Bank, and Pitchbook predicts this trend may continue into Q2 2023. In Miami, the ecosystem has doubled its annual deal count in three years from 2019 to 2022, remaining strong in this first quarter of the year, almost matching Washington, D.C., deal counts. Philadelphia has also grown to be the fifth most active region.

Exit count was also down in comparison to past years, with exit value declining to pre-2013 levels. Pitchbook reported an observed exit count of 227, the second lowest exit count since Q2 2013. Total exit value was $5.8 billion, which is slightly lower than Q4 2022 deal value of $6.2 billion with a total deal count of 239.

Of the 227 observed exits in Q1 2023, around 71%, or 162, of total observed exits came from acquisitions, 20 exits were through public listing and 45 were buyouts. These numbers are again comparable to Q2 2013, which had 162 acquisitions, 24 public listings and 21 buyouts. Further, the breakdown of exit counts from Q1 2023 is not far off from Q4 2022, which had 167 acquisitions, 15 public listings and 57 buyouts.

Q1 capital invested in female-founded companies is lower than in 2022. Deal count has also slowed for female-founded small businesses, reaching pre-2017 numbers. Despite a decline in deal count and share of deals, deal value increased slightly for all-female-founded companies.