Global VC Funding Falls off a Cliff in Q1 2023, Declines Over $86 Billion

Venture and growth investors in private companies continued to pull back on investments during the first quarter of 2023, according to recently released data from Crunchbase.

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Global Funding Data From Q1

Funding in the first quarter reached $76 billion globally. That’s a large number, but it’s also a number that marks a 53% decline from the first quarter of 2022’s $162 billion. 

Even more troublesome is the fact that the $76 billion includes two massive deals: a $10 billion investment in OpenAI led by Microsoft Corp. and $6.5 billion for Stripe Inc. 

Take both of those deals out of the equation and $76 billion globally quickly drops to roughly $60 billion. 

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Are Startups The Only Ones Suffering?

When VC funding dips, it’s natural to assume that startups will take the brunt of the fall. And that’s especially true in the first quarter of 2023 with the collapse of Silicon Valley Bank, a financial institution that had 20,000-plus startup depositors. 

But companies across the board — from startups to established organizations — are feeling the crunch. This can be seen by the way that every funding stage in the first quarter was down year over year. And not just down slightly, but anywhere between 44% and 54%. 

Take a look at the impact of VC funding by stage.

Seed

Seed funding for the first quarter totaled $6.9 billion, a 44% decline from the previous year. This is noteworthy because seed funding was the least-affected funding stage during 2022, with an increase in funding for each quarter based on a year-over-year comparison until the final quarter of the year. 

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Early Stage

Early-stage funding for the first quarter totaled $25.6 billion, a 54% decrease year over year, continuing a decline that started in the third quarter of 2022. Within early-stage funding, Series B funding experienced a larger decline compared to Series A.

Late And Large

Late-stage funding totaled $43 billion for the first quarter, a considerable decrease from $93 billion in the first quarter of 2022 but up from $34 billion in the fourth quarter. Notably, OpenAI and Stripe raised billions of dollars, making up 22% of all venture capital raised during the quarter and 38% of late-stage financings.

Second-quarter results will reveal a lot about where things are heading for the remainder of 2023 and into the first quarter of 2024. 

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