Jan 29, 2024 - News

Triangle startups had a rough year in 2023. Will 2024 be any better?

Data: PitchBook; Chart: Axios Visuals
Data: PitchBook; Chart: Axios Visuals

After years of strong growth, startups in the Triangle found money much harder to come by last year.

  • And local investors aren't sure whether 2024 will be any better.

Driving the news: Regional startup funding fell more than 70% to $1.2 billion in 2023, according to data from PitchBook.

  • The number of companies receiving investments also fell by 20% to 163.

The big picture: The slump was felt all across the U.S. — not just in the Triangle — as higher interest rates made raising money more expensive, company valuations shrunk and optimistic growth targets from the pandemic era didn't pan out, Axios' Dan Primack wrote.

  • Scot Wingo, a local investor with the Tweener Fund and CEO of the on-demand car servicing startup Spiffy, said the slowdown in investment really hit the Triangle in the second half of the year, with many early-stage companies finding it difficult to raise any funding at all.

State of play: The year was especially brutal for tech layoffs, with many of the region's largest employers laying people off, including Red Hat, Google, Lenovo and Cisco.

Yes, but: There were still some bright spots. A number of local companies are seeing traction around providing data and AI services for health care, Wingo said.

  • And the largest local raise of 2023 came from the Research Triangle Park pharmaceutical company Pathalys Pharma, which brought in $150 million from investors.

What's next: Jason Caplain, a general partner at Bull City Venture Partners, said last year was the hardest time to raise money since the 2008 recession.

  • He doesn't see it getting much easier until perhaps the latter half of 2024 and that a lack of local initial public offerings and acquisitions has starved many investors of fresh capital to re-invest.

What they're saying: "I think the number of [startups] has to normalize a little bit and interest rates coming down and IPOs coming back will help," Caplain said.

  • At the moment, though, the whole startup ecosystem is clogged up, he said.
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