Despite growing interest in private markets and other alternative investments, US venture capital (VC) funding activity saw a significant slump in the first half of 2023 according to new stats.
There were 4,218 deals with disclosed funding during the six-month period, with a total value of $64.6 billion. This was a 35% decline year-over-year in deal volume and a 49% drop in deal value.
The figures from GlobalData show that the same period of 2022 saw 6,458 deals with a value of $127 billion.
“Now that the dent in investor sentiment is a global phenomenon, almost all the key markets including the US, are experiencing subdued VC funding activity,” said Aurojyoti Bose, Lead Analyst at GlobalData. “Nevertheless, it did not alter the US’ dominance in global VC funding landscape, and it continues to account for the highest share of deal volume as well as value.”
The United States accounted for 38% of global deals announced in the first half of 2022 and 51% of deal value.
Among the largest US deals were $6.5 billion raised by Stripe, $1.3 billion funding secured by Inflection AI, $500 million by Rippling, $500 million raised by Sandbox AQ, and $450 million secured by Anthropic.
A separate report from Galaxy Digital shows that investors have also pulled back VC for crypto asset startups.
The crypto and blockchain sector saw $2.32bn invested globally in the second quarter of 2023, marking a new cycle low and the lowest since Q4 2020, continuing a downtrend that began after a peak of $13bn in Q1 2022.
Again, the US dominates the space with US-based crypto startups accounting for more than 43% of all deals completed and raised more than 45% of the capital invested by VC firms according to Pitchbook data.
“US-based companies dominate the crypto ecosystem, and American policymakers seeking to retain top talent, promote technological and financial modernization and dominance, and extend American leadership into the economy of the future would be wise to develop progressive policies that foster growth an innovation,” the analysis from Galaxy Digital’s Alex Thorn and Gabe Parker states.
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