Venture capital investors are putting less money into startups
The total amount venture capital investors poured into startups over the past year has reached its lowest level since 2019. There was still significant investment in emerging companies specializing in artificial intelligence over the past twelve months, but for the rest of the industry, it was more challenging.
$170.6 billion (approximately €156 billion) in the U.S. last year, spread across about 15,000 deals, according to market researcher PitchBook. This marks a decrease of about thirty percent compared to 2022.
Not only in the U.S. was there a decline in investment in startups, but the global venture capital industry also saw a decrease. Investors worldwide put $345.7 billion into startups last year, marking a 35 percent drop from the previous year and the lowest amount since 2017.
In Europe, the total value of startup financings was considerably lower too last year, expected to be around 38% less than in 2022. However, there’s still growth visible in investments compared to 2019/2020. Particularly, European startups innovating in climate infrastructure benefited from new investments in 2023.
Venture capital had previously helped propel influential companies like Amazon, Google, and OpenAI. The Financial Times had reported earlier on tougher times for private equity firms. The high interest rates had put pressure on company valuations.
While 2023 was a lean year for mega-deals, several Dutch startups and scale-ups still managed to secure substantial funding.
The preceding year, 2022, displayed a mixed picture: significant deals marked the first half, but by summer, investors in startups and scale-ups became more cautious with their investments.
This trend persisted in 2023: international mega-deals of hundreds of millions became scarce. Nevertheless, scale-ups with a compelling narrative and a strong track record still secured substantial funding this year.
European startups innovating with climate infrastructure received the most attention from investors last year. Many investments in 2023 were all in companies involved in climate innovations. This means that the current venture capital landscape differs from that of 2022.
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