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Increased due diligence may tame consumer VC activity

Feb 13, 2023
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Illustration: Sarah Grillo/Axios

Consumer and retail companies looking for VC dollars will be facing far more scrutiny as investor focus shifts to profitability, a KPMG report on VC funding finds.

What they're saying: “While there is plenty of capital to be deployed, the due diligence with respect to investments in general has increased which extends time lines and, in some cases, eliminates certain targets from being considered for investment,” Conor Moore, a national leader at KPMG U.S. Private Enterprise tells Axios in an emailed statement.

State of play: Consumer-focused startups are more acutely sensitive to recessionary pressures, energy prices, and consumer spending habits.

  • “These businesses were historically valued primarily based on top line revenue growth but investors are now significantly more focused on profitability which is putting pressure on certain business models,” Moore says.

By the numbers: Global venture capital investment slowed to $75.6 billion in the fourth quarter of 2022 across 7,641 deals, according to the report.

  • Corporate VC participation fell for the fourth consecutive quarter, and in the U.S. it declined to the lowest levels since the fourth quarter of 2019.
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