Unpacking Global Venture Funding Trends

In August 2023, the global venture funding scene took a surprising turn, settling at around $22 billion, which marked a 19% increase from the previous month. However, this figure was still 16% lower than the impressive $26.2 billion invested in July 2022, as reported by Crunchbase data. These numbers might seem like a financial roller coaster. But they offer valuable insights into the state of the global venture funding.

New Normal for Venture Capital

Last month’s funding total appears to have set a new standard for venture capital, with monthly averages in 2023 hovering just above $23 billion. It’s clear that active investors have adjusted their funding pace at every stage, leading to this apparent new normal. However, it’s worth noting that late-stage funding saw a year-over-year increase for the first time in 18 months, even though it hadn’t reached its peak for the year.

Early-stage funding took a significant hit in August, nearly halving its figures from a year ago. Seed funding also experienced a decrease of around one-third from the previous year. These declines suggest a shift in investor priorities, perhaps favoring more established startups over riskier early-stage ventures.

Deal counts in August 2023 almost halved compared to the previous year. It’s important to keep in mind that seed fundings tend to be added to databases more slowly over time, often after the end of a month or quarter. This lag in data reporting might have contributed to the apparent decline in deal counts.

To learn more about startup funding, see if you qualify for membership to join Founders Network.

A Glimpse of Hope on the Horizon

Despite the current funding landscape, there is optimism on the horizon. In August, two well-funded venture-backed unicorn companies, Instacart and Klaviyo, filed plans to go public in September. Alongside them, Arm Holdings’ planned Nasdaq debut, set to be the largest tech IPO in almost two years, could have a positive impact on the entire startup funding ecosystem.

Late-stage funding took center stage in August 2023, totaling an impressive $13.3 billion. This marked a 25% increase compared to the same month in the previous year. While it wasn’t the peak for late-stage funding this year (thanks to the $10 billion OpenAI funding in January), it still exceeded the monthly average for 2023.

In August, various sectors attracted substantial funding. Transportation, particularly China-based electric vehicle companies, led the way. This was followed by sustainability-focused EV battery companies and biotechnology firms. Surprisingly, AI, despite its prominence, wasn’t the largest sector. It secured around $2.7 billion, or roughly 13% of all venture funding that month.

Healthcare and biotech companies raised approximately $5 billion, accounting for 23% of all venture funding in August. The transportation sector followed closely with $4 billion. This was primarily due to the substantial investments in Chinese electric vehicle companies. Financial services companies also saw notable success, raising $2.8 billion.

Ups and Downs in Valuations

Some companies experienced remarkable growth, with disclosed valuations increasing by over 75%. These included open-source generative image company Hugging Face, Tel Aviv-based large language model company AI21 Labs, and sales marketing platform Apollo.io. However, there were also down rounds, as seen with Ramp, which secured $300 million in funding at a valuation of $5.8 billion, down from its 2022 valuation of $8.1 billion.

In conclusion, August 2023 was a month of ups and downs in the venture funding landscape. While early-stage funding and deal counts faced challenges, late-stage funding and various sectors, such as transportation and healthcare, showed resilience and growth. With promising IPOs on the horizon, the startup funding landscape remains dynamic and ever-evolving, promising both challenges and opportunities for investors and entrepreneurs alike.

Want more insights on global venture funding trends? Subscribe to our fnInvestor Program Newsletter.