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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.

The third quarter of 2023 continues the venture capital market’s recent two-year decline in investments, investors, and initial public offerings. This puts a squeeze on startups. How helpful investment funding will be to startups in the rest of 2023 and beyond likely depends on whether the downward trends settle in alignment with pre-pandemic activity or continue into a VC-specific recession. Regardless, there could be dire consequences for many companies.

Total deal counts across angel, seed and VC deals for Q4 2022 were the lowest of the year at 2,935 deals, a decrease of 670 deals as compared to Q3 2022, according to Q4 data from PitchBook-NVCA Venture Monitor Q4 2022. Despite low deal counts for Q4, 2022 is still on track to come in close behind 2021, which marked the highest deal count since the data began being collected in 2012. A strong total deal count alongside a high deal value reflects a successful year for venture capital, even amid economic strain caused by high interest rates, the Russian-Ukrainian war, and lingering COVID-19 impacts. 

Earlier this week, the U.S. Department of the Treasury announced the approval of seven additional states’ programs for State Small Business Credit Initiative (SSBCI) funding, totaling over $1.6 billion: Florida, Georgia, Illinois, Louisiana, North Dakota, Oklahoma and Virginia. A short summary of these states’ plans, all of which include investment capital, are available below:

Between federal interest rates over 3% and post-pandemic economic impacts that affect macroeconomic trends, many have predicted a continued decline in venture capital outcomes, only some of which has held true through Q3. 

The PitchBook-NVA Venture Monitor Q1 2022 reports that overall venture capital (VC) investment activity was down in Q1 2022, a change from the unprecedented growth seen quarterly through 2021. However, angel and seed stage financing remained strong. Additionally, deal activity for early-stage deals had a strong start in Q1 2022, with a total of 1,499 reported deals as of March 31. Late-stage deal activity also retained its rapid growth this quarter from the previous year.

A team of researchers recently assessed the relationship between angel investing and venture capital (VC) for startups. Although they found some variation in the performance of companies based on their share of angel and VC financing, there was no clear indication that angel investing provides any unique value for a startup.

Loyalty to alma maters matters financially beyond March Madness™ and college sports betting, it turns out — to such a degree that policy makers, venture development organizations and university seed funds hoping to attract equity investments for local innovation startups should pay considerable attention to the educational attainment section of founders’ LinkedIn profiles or resumes. Additionally, seed and VC funds organized in part for economic development goals may want to tap alumni networks from the regions’ institutions of higher education to identify potential investment partners, according to a recently released working paper from a trio of professors in Iowa, Texas and Michigan.

Forthcoming research suggests venture development organizations, that is, those publicly-supported nonprofits that combine risk financing with expert technical assistance to grow local innovation-based startups, should give careful consideration to the exit histories of the venture capitalists they partner with to move the VDO’s portfolio firms through seed and series A investment rounds. Who those VCs know and have worked with to achieve successful exits previously through acquisitions or IPOs, in many cases, may be more important than the VC firms’ zip codes or assets under management.

While venture capital (VC) deal activity by women-(co)founded and women-led companies has increased over the last 15 years by some metrics, a new report indicates that the 2020 pandemic and global recession impacted these companies more than companies founded and led by men. In the second edition of its annual All In Report, PitchBook expands on its efforts to shed light on the dynamics of women’s participation in the VC market. While participation in the VC market was impacted for companies founded and led by men and women in 2020, the report highlights the impact on women-founded and -led companies by showing recent declines in nearly every measure used in the report compared to nearly constant pre-pandemic trends in increased deal count, deal value, company valuation, and exit rates by women-founded and -led companies.