US venture capital (VC) investment is stabilizing but the amount of funds raised by VC-backed companies during the second quarter of 2023 posted a significant drop over the same period in 2022, according to new data from PitchBook.
According to a first look at data from the upcoming quarterly PitchBook-NVCA Venture Monitor, set to be published next week, US VC-backed companies raised $39.8 billion during the quarter, a 48% decline year-over-year.
This puts US startups on track to raise about the same amount of funding as they did in 2020, according to PitchBook.
The firm noted that investors are yet to regain the optimism that fuels startup bull cycles, despite a recent comeback for large tech stocks spurred around generative artificial intelligence (AI).
With investors having greater negotiating power, prices for startups are falling but remain elevated when compared to pre-2021 levels at most stages.
Median US VC valuations have continued to correct across all stages excluding the seed stage, where valuations are modestly higher than in 2022, PitchBook said.
The decrease in valuation has been sharpest at the venture-growth stage, where the median pre-money valuation dropped 62% from the year-ago quarter to about $126 million.
The firm also noted that few VC-backed companies have achieved notable exits so far this year, with the initial public offering (IPO) market yet to attract a significant tech listing.
Acquisitions have also been dampened by corporate cost-cutting initiatives and higher borrowing costs for leveraged buyouts, it noted.
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