Bad News First
Venture capital markets have been on the decline for the past seven quarters, with no signs of improvement in sight. According to preliminary data from PitchBook, venture deal volume has fallen every quarter since Q2 2022 across the world. The third quarter’s decline was particularly sharp, with 7,434 deals compared to the previous quarter’s 9,563 deals.
A Closer Look at the Numbers
While it is essential to note that some deals may have flown under the radar and are still being reported, PitchBook’s estimated deal count for the last few quarters suggests that more deals were closed in Q1 2023 than in Q4 2022. However, this does not change the fact that Q3 2023 was the second consecutive quarter with declining deal counts.
The data also shows that both Q2 and Q3 2023 saw significantly fewer deals than Q1 2022, when a record tally of 15,483 deals was reached. This slowdown becomes even more apparent when examining the capital involved in venture deals. Total venture investment around the world amounted to $73 billion in Q3 2023, compared to $105.9 billion a year earlier.
A Record-Low Dollar Volume
The decline in venture deal volume is not an isolated incident; it’s part of a broader trend. When including estimated deal count, there’s a smaller gap between the second and third quarters of this year: Q2 had 11,170 deals, while Q3 had 10,095. The only other region to show an increase in capital raised by startups is Latin America, but only because it recovered from a nearly complete collapse in capital availability in the first quarter.
A Glimmer of Hope
While the global venture capital market is shrinking, there’s a glimmer of hope in Europe. According to the data, European startups have seen an increase in capital raised in each quarter so far this year:
- Q1 2023: $13.8 billion
- Q2 2023: $16.2 billion
- Q3 2023: $17.3 billion
While it’s unlikely that Europe will post a better number in 2023 than last year, the trend is undeniably positive compared to other regions.
Will the Trend Reverse?
After seven quarters of consecutive declines, it’s challenging to predict when the trend will reverse. Venturing a guess feels as risky as catching a falling knife, so we’ll hold off making any predictions for now. If things persist at this pace in Q4 2023, we’ll have seen two straight years of declines in VC investment around the world.
Conclusion
The global venture capital market is experiencing a slump, with no signs of improvement in sight. While there’s a glimmer of hope in Europe, it remains to be seen whether the trend will reverse anytime soon. For now, investors and startups must navigate this challenging landscape and adapt to the changing market conditions.
Related Topics
- EC Market Analysis
- EC Venture Capital
- Investment Trends
- Pitchbook
- Startup Funding Trends
- Startups
- The Exchange
- Venture
About the Author
Alex Wilhelm is a senior reporter for TechCrunch, covering markets, venture capital, and startups. He’s also the founding host of TechCrunch’s Webby Award-winning podcast Equity.
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