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Useful Stats: An overview of 2023 VC activity

January 18, 2024
By: Conor Gowder

United States venture capital activity not unexpectedly slowed down in 2023, cooling off after multiple years of record-high deals and values during 2021 and 2022, according to the PitchBook-NVCS Venture Monitor Q4 2023. Pitchbook-NVCS estimates a total deal count of 15,766 (13,608 actual + 2,158 estimated) for 2023– exceeding the values of 2020 and prior years but falling several thousand short of the last two years. Between these deals, just $170.6 billion was invested, a drop of $71.6 billion from 2022 and $177.4 billion from 2021.

It is important to note that PitchBook continuously identifies new deals and updates their datasets, often leading towards an increase in deals and values over time. Thus, older datasets are often more complete, which may cause direct comparisons between more recent and older years to not provide an accurate picture of the venture landscape.

This edition of Useful Stats will explore 10-year trends in venture activity by stage and state using the Venture Monitor report data.

 

Venture activity by stage

Data as of December 31, 2023, show a decline from prior years in the proportion of pre-seed and seed investments to the annual total and an increase in all other stages (early-stage, late-stage, and venture growth). Figure 1 below shows VC deal activity by stage.

Figure 1: Deal activity by stage, 2014-2023.

 

The combined pre-seed and seed values decreased by nearly $10 billion year-over-year, from $24.2 to $14.6 billion. PitchBook-NVCA attributes this to a pullback of large investors as the market adjusts following the massive waves of capital investments in 2021.

This pullback can be further seen in the sustained record-high trends in median deal size for both pre-seed ($0.6 million) and seed ($3.0 million) stages.

 

Venture deal count and value by state

California continued to lead the nation in 2023 for both VC deal count (4020 deals) and value ($81.6 billion), with over double the deals and nearly four times the deal value of the next state, New York (1845 and $21.6 billion)—based on data as of December 31, 2023. Massachusetts (813 and $16.2 billion) and Texas (835 and $6.7 billion) follow.

Figure 2 below shows the state-total deal counts and values over the past 10 years from 2014-2023.

Figure 2: Each state’s venture capital deals and values, 2014-2023.

 

While the above state-level data is interesting, it is not uncommon for states like California and New York to dominate the trends. By looking at relative changes within each state instead, we can get a better picture of the changes over time. Figure 3 below shows each state’s percentage share of the total VC deal count for the last ten years and a trendline representing the same data.

The below data reveals that many states historically seen as hubs for VC activity (e.g., California and Massachusetts) are losing share to the rest of the nation. Other states, like Florida and Delaware, are growing in VC deal count.

Figure 3: Percentage share of VC deal count by state and year.

 

However, a different trend can be seen when looking at the percentage share of VC deal value; top states like California, Massachusetts, and Colorado are trending upwards. These numbers and more can be found in Figure 4 below.

California’s massive jump in percent share is largely due to Anthropic and OpenAI—both AI companies are headquartered in San Francisco—which accounted for nearly $17 billion, or 10% of 2023’s total deal value[1].

It is, again, important to note that these values are as of December 31, 2023, and will almost certainly change as new deals are added to PitchBook’s database.

Figure 4: Percentage share of VC deal value by state and year.

 

SSTI coverage of the 2022 and 2021 Venture Monitor reports can be found at their respective hyperlinks.

 

This article was prepared by SSTI using Federal funds under award ED22HDQ3070129 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

 

[1] PitchBook-NVCA note that $1 out of every $3 invested went into AI companies in 2023, despite comprising approximately 20% of the deal count.

useful stats, venture capital, vc, seed capital