The venture market has shrunk by a third in 2023
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The preliminary volume of the global venture market in 2023 decreased by 35% compared to 2022 and amounted to $345.7 billion, according to data from the American analytical company PitchBook. The size of such investments was the lowest since 2019, when it amounted to $333.4 billion. Along with the amount of venture investments, the number of transactions also decreased. If in 2022 there were 51,894 transactions, then in 2023 there were 27% fewer, 37,809 (taking into account the proposed transactions, the drop will be smaller, minus 16%). The volume of funds raised by venture funds in 2023 decreased even more dramatically than the overall market size – by 47.5%, to $160.9 billion.
With a general reduction, the most significant interest was recorded in startups in North America (mainly the USA) – they accounted for more than half of the volume of venture investments (51.8%, or $179.1 billion). More than a quarter (26.4%, or $91.1 billion) were investments in Asia; 18%, or $61.9 billion, in Europe. 38% of all venture capital deals were concluded in North America. Asia accounted for 11,307 transactions, or 30%; Europe accounted for 9,429, or 25% (for information on how venture investments developed in the Russian Federation in 2023, see “Investors saved on technology“).
With the predominant share of venture investments in US companies (in 2023, according to preliminary data, they amounted to $170.6 billion), their size decreased by 29.6% compared to 2022. The number of transactions also decreased: taking into account only completed ones (13,608), the drop was 22.6%, including the expected ones (another 2,158) – 10.4%. The volume of funds raised by venture funds in the United States amounted to only $66.9 billion, which is almost 2.6 times less than in 2022.
As KPMG Private Enterprise analysts previously pointed out, venture investing in 2023 has become even more risky due to rising bank interest rates, persistently high global inflation and worsening geopolitical problems. However, amid all this uncertainty, investment in artificial intelligence technologies remained high in 2023. For example, in the second quarter of the year alone, the American startup Anthropic raised $450 million from Google and other investors to create a next-generation AI assistant, and Inflection Al received $1.3 billion, including from Microsoft and Nvidia, to create a chatbot Pi for “casual conversations” (see “Kommersant” for July 29, 2023).
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