Global Startup Funding Remains Subdued But IPO Market Sparks Hope Of Rebound

Global venture funding settled around $22 billion in August 2023, up around 19% month over month but down 16% from the $26.2 billion invested in August 2022, Crunchbase data shows.

Last month’s startup funding total was on par with what’s emerged as the new normal for venture capital. So far in 2023, funding has averaged just over $23 billion per month as active investors have cut back their funding pace at each stage.

Late-stage funding increased year over year for the first time in 18 months, but was still below the peak for this year, Crunchbase data shows.

Early-stage funding almost halved and seed funding was down by around one-third from a year ago.

Deal counts in August 2023 almost halved from a year earlier. (Though it’s good to keep in mind that seed fundings are typically added to the database more slowly over time, after the end of a month or quarter.)

Market opening

While startup funding has settled into a new, lower normal, there is hope on the horizon. Last month, two well-funded venture-backed unicorn companies — grocery delivery platform Instacart and targeted marketing platform Klaviyo — filed plans to go public in September. When they do, their offerings and Arm Holdings’ planned Nasdaq debut — slated to be the largest tech IPO in almost two years — could buoy the entire startup funding landscape.

Late-stage bump

Late-stage funding last month totaled $13.3 billion, up around 25% compared to August 2022.

While last month did not mark the peak for late-stage funding this year — the $10 billion OpenAI funding vaulted January to the leading month for late-stage funding this year — it was still above the monthly average in 2023.

The largest fundings last month were raised by companies in transportation, specifically China-based electric vehicle companies, sustainability with EV battery companies, and in biotechnology.

Despite some large fundings to generative AI companies, AI wasn’t the largest sector. Funding to AI companies totaled around $2.7 billion — about 13% of all venture funding — in August.

Health care and biotech companies raised around $5 billion — or 23% of all venture funding in August. The transportation sector raised $4 billion, with large fundings to China-based electric vehicle companies. Financial services companies raised $2.8 billion last month.

Companies with disclosed valuations that raised funding at an increased valuation of more than 75% included open-source generative image company Hugging Face, Tel Aviv-based large language model company AI21 Labs, and sales marketing platform Apollo.io.

We also saw down rounds. Ramp raised a $300 million funding at a $5.8 billion valuation — down from its $8.1 billion valuation in 2022.

Methodology

Funding rounds included in this report are seed, angel, venture, corporate-venture and private-equity rounds in venture-backed companies. This reflects data in Crunchbase as of Sept. 5, 2023.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

As of January 2023, we have made a change to how we include corporate funding rounds in our reporting. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)