Late-stage deals plummet to 21-quarter low in US as VC funding halts

SAN FRANCISCO: Late-stage deal value in the US plummeted to a 21-quarter low, hitting only $11.6 billion in the first quarter of 2023, according to a new report.

Fundraising's momentum has all but come to a halt, with only $11.7 billion closed across 99 funds, according to PitchBook-NVCA Venture Monitor.

Nationwide, there were an estimated 3,888 deals valued at $37 billion, down from 5,243 deals valued at $82.4 billion a year ago, according to the figures.

"Venture-growth deal value ticked upward in Q1 2023, influenced heavily by Stripe's $6.5 billion raise. Deal count in the growth stage hit the lowest it has been since Q3 2020," the report mentioned.

The estimated deal count for Q1 2023 remains above 2020's quarterly figures, despite a drop from Q4 2022.

"There is no denying the obvious: Venture capital has gone through a rough couple of months," said the report.

"Deal activity dropped in all stages and sectors during the first quarter of 2023, and the fundraising momentum carried from 2021 has evaporated," the findings showed.

Just when a difficult exit environment seemed like it couldna¿t get worse, the sudden failure of Silicon Valley Bank further rattled investors' confidence in the first quarter.

"The VC market trends that started in the middle of 2022 came into sharper focus in the beginning of 2023," the executive summary read.

"Continued instability abroad, stubborn inflation rates, and several high-profile bank failures contrasted with a bevy of positive macroeconomic indicators spread a plume of anxiety across the markets," it added.

The report expects the fundraising experience for first-time fund managers in smaller VC markets "to be especially strenuous through the rest of the year".