Despite OpenAI and Stripe, VC funding has plummeted this year

7 Apr 2023

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New data from Crunchbase has revealed that VC funding in the first quarter was down more than 50pc compared to last year.

Figures are in for venture capital investment in the first quarter of 2023 and things don’t look good.

According to Crunchbase data, global VC funding in Q1 is down 53pc year on year to $76bn as investors across all investment stages navigate a challenging macroeconomic environment. In the first quarter of last year, private companies of all sizes raised a total of $162bn in VC funding.

What’s more, the latest figure includes two giant deals: Microsoft’s reportedly $10bn investment in ChatGPT creator OpenAI to lead the AI race and payments giant Stripe’s $6.5bn funding round last month (albeit with a significant slash in valuation).

Without them, funding raised in Q1 this year would be around $100bn below last year’s levels.

Crunchbase data shows that funding was down across the board, from seed to late stage, at anywhere between 44pc and 54pc, highlighting a cautious investment environment where VCs focused more on helping existing portfolio companies rather than betting on new ones.

No doubt the collapse of California’s Silicon Valley Bank (SVB) a month ago will have had a role to play in this slowdown, which is only likely to continue in the short term.

At the time, Ian Browne, MD of the NDRC accelerator, said on Twitter that Irish start-ups within its portfolio have also been directly impacted by the SVB collapse.

“It will however require time to sort out,” Browne said. “This will mean cashflow difficulties for those affected and the inability to pay staff and suppliers. Frozen accounts will remain frozen for a period of time.”

VC funding raised by Irish start-ups fell sharply towards the end of last year, according to a survey published by the Irish Venture Capital Association (IVCA) recently. The survey showed VC investment decline by 47pc in the fourth quarter of 2022 compared to the same period in 2021.

“The flight of international capital in the fourth quarter highlights Ireland’s exposure and the need to boost local sources of funding for scaling companies,” said IVCA chair Leo Hamill after the survey was published.

“It should also be remembered that VC funding in Ireland in 2022 was still 43pc ahead of 2020, despite all the global economic challenges and uncertainties faced last year,” he added.

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Vish Gain is a journalist with Silicon Republic