Global venture funding slumped in the second quarter ended June 30, dropping to its lowest level since 2020 as high inflation, a tightening of consumer spending and economic uncertainty around the world made investors more cautious.
Global venture dollars reached $60 billion in the second quarter, down 13% compared to the first quarter’s $69.7 billion, according to CB Insights.
The first quarter record was boosted by multibillion-dollar deals to OpenAI and Stripe. “Without these Q1 deals, Q2’23 funding would have grown 14% QoQ,” said the U.S. business analytics platform which provides market intelligence on private companies and investor activities.
The number of deals fell for the fifth consecutive quarter to reach 6,385 — the lowest count since 2016.
Merger and acquisition (M&A) deals also declined by 9% to hit 2,010, lowest in 11 quarters.
Among sectors, fintech saw the sharpest funding decline, falling 48% over the previous quarter to hit $7.8 billion, the lowest since 2017. Deal count also fell sharply, dropping by 22%.
– Not all gloomy
Despite the decline in investment and deals, the initial public offerings (IPO) market, in which companies open up their ownership to the public, jumped 17% QoQ to hit 102 after falling for 2 consecutive quarters, CB Insights said.
The top two IPOs by valuation were India-based pharma company Mankind ($6.5 billion) and China-based chipmaker Nexchip Semiconductor ($5.8 billion).
Also, the quarter saw a fairly reasonable number of unicorns – startups valued at a billion or more dollars. After hitting a six-year low in the first quarter, new unicorn births rose 20% to hit 18.
The U.S. accounted for half of the new unicorns with nine, followed by Asia with five.
China-based tea brand ChaBaiDao and US-based cloud compute provider CoreWeave were the top two new unicorns by valuation, with valuations of $2.5 billion and $2.2 billion, respectively.
Despite the increase, the number of new unicorns is still at an all-time low. The total of 18 new unicorns marks an 80% drop from the same quarter in 2022.
– Retail tech funding fell 24%
Retail tech funding fell 24% in the quarter and the number of deals fell 15%.
Funding in the sector slowed in the second quarter of 2023, with investors pouring $3.1 billion into 348 deals.
The United States led the way in terms of funding, with startups receiving $1.7 billion across 153 deals. Asia was the second-largest market, with $1.4 billion invested in 195 deals.
Nearly 70% of retail tech deals went to early-stage companies this year.
The biggest deal of the quarter was Zipline, an on-demand drone delivery and instant logistics firm, which raised $330 million in a Series F round.
Singapore’s e-commerce company TK Mall was the next biggest deal, bringing in $300 million in an undisclosed round.
Kite, a New York-based commerce company, followed suit, closing a $200 million Series A round to bolster its acquisition spree.
Digital health funding remained relatively stable, falling by just 3% to $3.4 billion.
Discover more from Pluboard
Subscribe to get the latest posts sent to your email.