In the dynamic realm of the venture capital (VC) landscape, there is a 32.3% year-on-year (YoY) decline in the number of funding deals with disclosed funding rounds from 9,118 to 6,174 during the first half (H1) of 2023, echoing the challenges faced by startups across funding stages. This trend, spanning both early and late-stage rounds, reflects the prevailing cautious sentiment among investors, says GlobalData, a leading data and analytics company.

An analysis of GlobalData’s Financial Deals Database revealed that globally there was a decline in the announcement of growth, expansion and late-stage (Series B onwards) as well as early-stage^* VC funding rounds.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “The global financial markets continue to experience fluctuations and uncertainty driven by events such as geopolitical tensions, trade disputes, and concerns about the pace of economic recovery after the COVID-19 pandemic. Collectively, these factors created an environment of uncertainty and caution, leading investors to adopt a more risk-averse approach during H1 2023. As a result, deal volume across all funding rounds registered decline.”

Early-stage funding rounds dominated the global VC funding landscape in terms of volume. A total of 4,980 early-stage funding rounds were announced during H1 2023, accounting for 80.7% share of the total number of VC deals with disclosed funding rounds announced globally during that period. These deals included 2,857 Seed rounds and 2,123 Series A funding rounds. Meanwhile, the volume of early-stage funding rounds declined by 28.8% in H1 2023 compared to 6,990 early-stage funding rounds announced during H1 2022.

Growth, expansion and late-stage funding rounds collectively accounted for 19.3% share of the total number of VC deals with disclosed funding rounds announced globally during that period. The total number of these funding rounds declined by 43.9% from 2,128 in H1 2022 to 1,194 in H1 2023.

Bose concludes: “The first half of 2023 is a testament to the intricate challenges confronting startups across all funding stages. The downward trend, spanning early to late-stage rounds, accentuates the imperative for startups to cultivate adaptability and fortitude in their pursuit of funding amidst the ever-changing market landscape.”

*Comprising Seed and Series A funding rounds

Source: GlobalData