There has been a 32.3% year-on-year (y/y) decline in the number of venture capital (VC) funding deals reflecting the prevailing cautious sentiment among investors.
Disclosed funding rounds fell from 9118 to 6174 during the first half (H1) of 2023.
This trend, spanning both early and late-stage rounds, reflects the prevailing cautious sentiment among investors, says GlobalData, a data and analytics company.
An analysis of GlobalData’s Financial Deals Database revealed that globally there was a decline in the announcement of growth, expansion and late-stage (Series B onwards) as well as early-stage VC funding rounds.
Aurojyoti Bose, the lead analyst at GlobalData, said, “The global financial markets continue to experience fluctuations and uncertainty driven by events such as geopolitical tensions, trade disputes, and concerns about the pace of economic recovery after the Covid-19 pandemic.
“Collectively, these factors created an environment of uncertainty and caution, leading investors to adopt a more risk-averse approach during H1 2023. As a result, deal volume across all funding rounds registered decline.”
Early-stage funding rounds dominated the global VC funding landscape in terms of volume. A total of 4 980 early-stage funding rounds were announced during the first half of 2023, accounting for 80.7% of the total number of VC deals with disclosed funding rounds announced globally during that period, it noted.
Meanwhile, the volume of early-stage funding rounds declined by 28.8% in the first half of 2023 compared to 6990 early-stage funding rounds announced during the comparative period in 2022.
Growth, expansion and late-stage funding rounds collectively accounted for 19.3% of the total number of VC deals with disclosed funding rounds announced globally during that period. The total number of these funding rounds declined by 43.9%.
Bose said: “The first half of 2023 is a testament to the intricate challenges confronting start-ups across all funding stages. The downward trend, spanning early to late-stage rounds, accentuates the imperative for start-ups to cultivate adaptability and fortitude in their pursuit of funding amidst the ever-changing market landscape.”
BUSINESS REPORT