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North American Startup Funding Looked Flat In Q3

Illustration of N. America-labeled piggy bank on an inclined plane. [Dom Guzman]

After a dramatic upswing and then a sharp descent, North American startup funding is exhibiting a new trendline: a flat one.

In the third quarter of 2023, investors put $31.4 billion to work across all stages in U.S. and Canadian startups, per Crunchbase data. That represents a drop of just 3% from the prior quarter, indicating that while investors aren’t fleeing the asset class, they’re also not excited enough to put more money into it.

For a sense of how investment stacked up across stages, we chart out dollar and round count totals for the past 11 quarters below:

If we had to summarize the investment environment in three letters, “meh” might be a good pick. We saw a few big venture-backed IPOs, most notably Instacart and Klaviyo, debut to ho-hum early performance. We saw some big rounds led by AI and sustainable battery tech. And we saw a bit of recovery in later-stage financings.

Early-stage investment, meanwhile, weakened considerably, delivering the lowest quarterly tally in years. Seed was also down some, pointing to a much tougher fundraising climate for founders.

Below, we look at each stage in more detail including trending and major rounds. We also take a look at the Q3 exit climate, which saw both higher IPO action and muted activity for venture-backed M&A.

Late stage and technology growth

Later-stage investment ticked sequentially higher in the third quarter, as average round sizes grew and venture capitalists backed some robust rounds tied to cleantech and artificial intelligence.

Overall, investors poured $16.8 billion in late- and growth-stage venture investments in Q3, per Crunchbase data. That’s an increase of 8% from the prior quarter, but still a decline of 15% from the same period a year ago. 

For a broader view of how the just-ended quarter stacks up, we chart out late-stage investment totals and round counts over five quarters below:

One of the largest rounds went to generative AI startup Anthropic, which raised $1.3 billion from Amazon

Batteries were also big. Redwood Materials, a Nevada-based startup focused on battery recycling for electric vehicles, picked up the largest round of the quarter, with a $1 billion Series D led by Capricorn Investment Group and Goldman Sachs. Another battery-tech startup, Ascend Elements, scored the second-largest late-stage round, snagging $460 million.

Meanwhile, cloud data platform Databricks, long a prodigious fundraiser, secured another $500 million in Series I investment. Another big round went to commercial spaceflight startup Axiom Space, which landed $350 million.

Early stage

Early-stage investment weakened in the third quarter, with a marked decline in both deal counts and total financing.

Altogether, investors put $11.5 billion into early-stage rounds in Q3. That’s a drop of 16% quarter over quarter and 38% year over year.

Round counts also fell, with just 662 reported early-stage deals in Q3, down 14% quarter over quarter and 31% year over year. For perspective, we chart out total early-stage investment and rounds for the past five quarters below:

The biggest rounds had a deeptech flavor. Denodo, a Palo Alto-based startup offering a data integration, management and delivery platform, scooped up $336 million in a Series B led by TPG. And Sierra Space, a Louisville, Colorado-based commercial space startup, raised a $290 million Series B that values the company at $5.3 billion. 

The drop in early-stage dealmaking doesn’t bode well for the startup ecosystem, given that VCs rely on Series A and Series B companies to deliver big returns down the road. Fewer funded companies means fewer future candidates for an IPO or big ticket acquisition.

Seed stage

Seed-stage investment was sequentially pretty flat in Q3, with $3.1 billion in total reported investment. That’s a drop of 4% from Q2 and 27% from the year-ago quarter.

Round counts declined more steeply, with just over 1,400 reported seed deals, the lowest total in years. For comparison, we look at how seed investment totals and round counts tallied up over the past five quarters:

The real state of seed in Q3 could be a bit better than this early snapshot indicates, as it’s not uncommon for seed-stage investments to get added to the Crunchbase database a few weeks or months after they close. As such, we expect to see the Q3 seed totals increase a bit over time.

A handful of large seed rounds played a big role in boosting the totals. The five largest seed rounds alone collectively brought in over $260 million, all for biotech startups. 


On the exit front, Q3 was neither the best of times nor the worst of times. We saw some much-anticipated public offerings make it to market, as well as a few good-sized acquisitions of venture-backed companies. Below, we look at the highlights in each category.


After years of topping lists of likely IPO candidates, Instacart finally made it to Nasdaq in September. Shares of the grocery delivery provider spiked in first-day trading but quickly shed their gains, with the company recently maintaining a market cap around $7.5 billion — less than a fifth of its peak private valuation in 2021.

Klaviyo, a marketing automation platform for companies to send targeted messages to customers, debuted a couple days later in a well-received offering. Shares are down some from their peak, delivering a recent market cap around $8 billion.

It also bears mention that the largest IPO of the quarter was from chipmaker Arm Holdings, which is not a venture-backed startup but nonetheless played a big role in determining the mood from retail investors. Arm is also down from its high but still retains a hefty $54 billion market cap.

Other venture-backed companies that ventured onto public markets in Q3 include Neumora Therapeutics, Apogee Therapeutics, and Surf Air.


As of a couple months ago, M&A involving U.S.-based, VC-backed companies was on pace for its slowest year since 2013, per Crunchbase data. Recent weeks haven’t done much to change that outlook.

Still, we did see some good-sized North American acquisitions announced in Q3. Highlights include:

  • Eli Lilly acquired Oakland-based Versanis Bio, a developer of obesity drugs, in a deal valued at up to $1.925 billion including potential milestone payments.
  • Carbon Engineering, a British Columbia-based developer of direct air capture technology, sold to oil company Occidental for $1.1 billion.
  • Novartis acquired DTx Pharma, a San Diego-based developer of RNA therapeutics, for $500 million up front and up to $500 million in milestone-based payments.

Flat is not exciting, but it could be worse

Overall, as we bid adieu to Q3, it seems the startup investment scene still hasn’t gotten its groove back since the market downturn began last year. Early-stage investment looks muted. And while high-profile startups can go public, they’re not exactly setting the markets on fire.

Even so, we did see some encouraging signs, including most notably an uptick in later-stage investment. And while total investment across stages looks pretty flat quarter over quarter, there are certainly worse things than flat performance.


The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Oct. 3, 2023.

The North America funding report covers the U.S. and Canada venture funding markets.   

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/year.

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

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. 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.)

Illustration: Dom Guzman

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