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Venture Capital & Startup Statistics to Prep Founders for 2023

Adam Hide
Adam Hide

EVP, Marketing

Article Summary
TL:DR

Key Takeaways
Adam Hide
Adam Hide

EVP, Marketing

After 2021 broke almost every record possible in the venture capital (VC) funding space, the 2022 slowdown wasn’t a surprise. Persistent inflation, rising geopolitical tension, and the crypto collapse were some of the factors influencing the bear market that followed 2021.

Residual capital from 2021 helped investors save enough dry powder to keep going in 2022 — but at a slow pace. However, as the market weakened even more in Q1 2023, many believe investors will spend more conservatively while waiting for deal values to decrease.

Early Stage VC firms, particularly those investing in startups during their early phases of development, are keeping a close eye on market trends and adjusting their strategies accordingly. With the changing landscape, startups seeking funding should be aware of the shifting investor sentiments.

Nonetheless, this shouldn’t discourage founders. 2023 is expected to return startup funding to normal, and the ups and downs of the past year won’t repeat themselves too soon.

For a clearer picture of the VC funding scene, we’ve compiled 100 stats to inform startup founders about where investors stand and where to set their sights for 2023.

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Seed-Stage Funding Statistics

Sharpest decrease in funding

The last two quarters of 2022 saw the sharpest decrease in funding. Seed-angel investments were the steadiest compared to 2021, with a flat year-over-year funding amount.

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Increased by 17%

The average deal size for angel-seed startups in 2022 increased by 17% YoY but decreased by 3% from Q3 to Q4.

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Decline of 33%

Q4 2022 had a surprising decline of 33% in investments for seed-stage startups compared to Q3. - Carta

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Increased by 16.7%

Seed-stage valuations in 2022 increased by 16.7% from the year prior and sat at $10.5 million. These are the highest valuations since 2012. - Pitchbook

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Pre-seed and seed investment activity in Brazil was stable in Q1 2023 as investors focused on startups with good return potential.

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$3.7 million

Average seed-stage deal values reached an all-time high in 2022 at $3.7 million, but this began dipping in 2023.

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Increased by 3%

Tech valuations for seed-angel stage startups increased by 3% from Q4 2021 to Q4 2022. Although marginal, it’s the only stage that reflected gains in the sector.

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Reached a low of 971 deals

Angel-seed funding has declined after making an incredible 2,065 deals in Q1 2022. In Q1 2023, it reached a low of 971 deals.

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Decreased by 68%

Q1 2023 seed capital raised decreased by 68% from the same quarter the previous year.

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Early-Stage Statistics

$132 million from $25.2 million

As opposed to other stages, early-stage valuations rose in 2022 to reach $132 million from $25.2 million the prior year.

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Challenging year

As per Crunchbase, 2023 will be a challenging year for funding in Series B and later stages.

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Dropped by 11%

While the median seed-stage round dropped by 11% YoY in Q1 2023, Series A fell a stark 47% over the same period.

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Dropped by 33.3%

While early-stage startups had a less traumatic year than later stages, quarterly analysis shows that valuations dropped by 33.3% from Q1 to Q4 2022.

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Series A tech deals in the US are expected to decrease by 15% to 1,250 in 2023, which were stable numbers between 2015 and 2020.

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$500,000

Most founders of early-stage startups that received $500,000 or higher in funding came from Standford, MIT, and Harvard

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Decreased by 7%

The average deal size of Series A funding in 2022 fell by only 1% YoY but decreased by 7% from Q3 to Q4.

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$9.6 million on average

Series A funding deals in 2016 were $9.6 million on average. In Q1 2023, the average was $18.7 million.

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Lowest deal count

Early-stage startups had their lowest deal count in Q1 2023 (825) since Q3 2020 (830).

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Late-Stage Statistics

Average of $16.3 million

In 2014, Series B funding deals were an average of $16.3 million. In Q1 2023, they were $40 million (a slight decrease from 2022).

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$288.1 billion

Late-stage startups are predicted to reach a market volume of $288.1 billion in 2023.

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41% of all venture debt

The venture growth stage, which proceeds late-stage startups, took 41% of all venture debt in 2022.

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Dropped by 97%

Deal counts for Series D funding fell by 90% from Q4 2021 to the same quarter in 2022. The amount invested dropped by 97%.

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Late-stage startups saw the sharpest decrease in funding by more than half YoY, receiving only $10.4 billion in Q4 2022 compared to $32.4 billion in the same quarter in 2021.

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$470 million in Q4

Late-stage startup valuations fell steadily in 2022 due to market volatility. The average stage valuation was $470 million in Q4.

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Falling by 50%

Series C tech valuations from Q4 2021 to Q4 2022 had the biggest drop from all stages, falling by 50%.

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Average of $74 million

The average Series C funding deal in 2014 was $26.4 million. In Q1 2023, it was $59 million—a stark drop from 2022’s average of $74 million.

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Diversity, Equity, and Inclusion Statistics

$41 billion

In 2022, female founders had their second-best year after 2021, with $41 billion in funding for startups founded by at least one woman in the US.

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raised $203.2 million

African startups led by women raised $203.2 million in 2022. - The Big Deal

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17.2% of all US deal values

Female founders continue getting a smaller piece of the pie in VC deals, with 17.2% of all US deal values in 2022. This was a slight growth from 2021.

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52% increase in investment

Diverse founders in 2022 say there’s been a 52% increase in investment interest and a 36% increase in investment.

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The Harvard Business Review reports that female founders backed by female-led VCs are less likely to raise a second round due to attribution bias

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8% of employees being black

Newer (10 years or less) and smaller VC firms remain the most diverse, with 8% of employees being black, 8% Hispanic, and 22% female.

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dropped to 32%

The rise of social movements in 2020 led 43% of VC investors to prioritize funding multicultural-funded startups. However, as these movements lose traction, a 2022 survey revealed this number dropped to 32%.

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Went down to 1.1%

Black founders saw investments drop for their startups in the US after having a market share of 1.5% in 2021. In 2022, it went down to 1.1%

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1.87% of $31 billion

Diversity remains underfunded in 2022. Only 1.87% of $31 billion from 213 VC funds was dedicated to startups with diverse leaders (underrepresented minorities and women).

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1% of partners

VC firms still struggle to hire diverse women. Only 1% of partners are black women, and 2% were Hispanic

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Global Venture Capital Statistics

Third-best startup

London was the third-best startup ecosystem in 2022, dethroning Los Angeles and being the only city outside the US in the top five.

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Ten best global startup ecosystems

Beijing, Bangalore, and Tel Aviv were part of the ten best global startup ecosystems of 2022.

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Most funded in California (49%)

Tech startups were the most funded in California (49%), followed by consumer goods and services (16%).

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Raised $100 million

In the tri-state area (New York, New Jersey, and Pennsylvania), the amount of rounds that raised $100 million or more dropped by 47%, from 154 in 2021 to 81 in 2022.

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Deals in Latin America experienced a sharp fall in Q1 2023, down 84% compared to the previous quarter.

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Fell for the sixth straight quarter

Brazil’s VC investments fell for the sixth straight quarter in Q1 2023.

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31.7% of all US deals

Bay Area deals in the US reached their lowest point since 2012, making up only 31.7% of all US deals in 2022.

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$1 trillion fund

Japan allocated a $1 trillion fund to diversify funding and exit strategies, among other aspects, to boost the national startup scene.

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Top 10 deals globally

Chinese startups attracted six out of the top 10 deals globally in Q4 2022.

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European startups have also taken a tumble with the market downshift. The biggest decrease in funding happened during the second semester of 2022, with Q4 declining by 46% Y-o-Y.

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13% drop

Compared to Asia and the US, 2022’s bear market didn’t affect Europe as much, with only a 13% drop in funding quarter-over-quarter.

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Crunchbase reports that Asian startups were also hurt by the slowdown post-2021. Funding dropped 39% in 2022 from $177.2 billion in 2021.

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90% of tech IPOs

APAC countries overcame the IPO drought better than most, thanks to China’s high proceeds and the active IPO markets in Malaysia and Indonesia in 2022. The region accounted for 90% of tech IPOs in Q4.

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IPO revenue

The United Arab Emirates ranked higher than the US in IPO revenue in Q1 2023.

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Sources

  • Pitchbook
  • Ernst & Young
  • Cooley GO
  • SVB
  • KPMG
  • Pitchbook-NVCA
  • Axios Pro
  • Crunchbase
  • CB Insights
  • Carta
  • S&P Global
  • Dealroom
  • McKinsey
  • The Big Deal
  • Morgan Stanley
  • Harvard Business Review
  • NVCA
  • StartupBlink
  • Beijing
  • Bangalore
  • Tel Aviv
  • WilmerHale
  • Diversity VC

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