Oct 5, 2023 - Economy

Venture capital slump continues in Q3

One hundred dollar bill folded into an arrow pointed downward.

Illustration: Megan Robinson/Axios

Venture capital dealmaking was down in the third quarter, according to preliminary numbers just released by PitchBook.

Why it matters: Late-stage deals, which showed the biggest decline, have not picked up despite a reopening of the initial public offering window.

  • "The median venture growth stage deal size is at its lowest annual point since 2016, while valuations for the stage have fallen to 2018 levels," per a statement from PitchBook analyst Kyle Stanford.

By the numbers: U.S. venture deals totaled $31.7 billion in Q3, down from $37 billion the prior quarter, and $46.4 billion in the comparable year-ago quarter.

  • Global venture deals came in at $73 billion in Q3, down from $81.4 billion in Q2, and $105.9 billion in the year-ago quarter.
  • European venture deals netted €15.8 billion (roughly $16.7 billion as of early Wednesday's exchange rates), up from €14.9 billion ($15.7 billion) in the second quarter, but down from €20.4 billion ($21.5 billion) in Q2 of 2022.

Between the lines: The U.S. market in Q3 saw $35.8 billion in total exit value, the highest since Q4 of 2021 — though more than half came from the Klaviyo and Instacart IPOs, which went out at valuations below their highest.

  • Acquisition deal value went up from Q2, but deal count was at the lowest in more than a decade, notes Stanford.
  • Other regions saw similar exit trends in Q3 as well.

Fundraising: That also lagged behind 2022, but its to be expected after last year record-breaking pace.

  • The only exception is Latin America, which is seeing the same level as 2022, though numbers overall are much smaller than other regions.

The bottom line: This is what happens when an industry goes from writing checks left and right to having to stretch back out capital deployment cycles — and not feeling as confident about where its own next check will come from.

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