The global venture capital market failed to turn the corner in the third quarter of 2023, instead racking up another quarter’s worth of declines in most parts of the world.
The data, however, can become a little bit abstract in numerical form. So, today, the TechCrunch+ team has charted the most important venture capital data we’ve seen thus far to help you better understand where global startup investing really is today.
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If the following charts aren’t enough for you, read our overview of Q3 venture results based on PitchBook data — we’ve also explored what’s going on in web3 and in Canada. As always, we’ll have more analysis and takeaways once the full set of data for the third quarter shakes loose.
For now, let’s get to the data viz, shall we?
Chart 1
Data visualization by Miranda Halpern, created with Flourish
Chart 1 shows the slump in the number of venture rounds that we have seen thus far in 2023. We still have to go through Q4, so the graph will look a bit better at the end of the year than it does right now, but it’s worth noting that it’s still been a year of declines.
Before we dig deeper into quarterly data to make that point, we should note that if 2023 continues to clock deals at its current average quarterly pace, we could see this year surpass 2019 and 2020 in terms of the total number of deals closed. So, yes, this year is not as great as the past couple of years, but it is also not that bad.
Things are getting worse, however.
Chart 2
Data visualization by Miranda Halpern, created with Flourish
We can see in Chart 2 that the decline in the number of venture rounds started at a regular and steady pace in Q3 2022, and that trend has not let up.
So while it is possible that we’ll see more fundraising deals being closed this year than we did in 2019 and 2020, if the declines persist, 2024 may very well end up being tougher for startups than 2023 or even the years before the recent boom.
Chart 2 also raises a couple of questions: When will venture capital activity bottom out and begin to rise again? Are we close to that bottom?
Chart 3
Data visualization by Miranda Halpern, created with Flourish
Chart 3 illustrates three important points:
1. We can see that greater venture capital investment stimulates capital flow to regions that have historically not attracted much money. For example, we can see that funding to startups in the Latin America and Rest of World buckets was almost zero back in 2019, but that changed dramatically when more venture capital entered the market. By 2021 and 2022, startups in those regions were able to raise significant amounts.
2. What goes up indeed comes back down. As we can see, since late 2022, capital availability in Latin America has declined to levels that, visually, seem more in line with pre-boom times. This contrasts somewhat with the Rest of World bucket, which is holding its own better.
3. This final point is the one we tried to outline in our first look at Q3 data: Europe is an outlier. While the rest of the world saw venture dealmaking slip consistently from quarter to quarter in 2023, European startups received more venture capital in each quarter, with Q2 besting Q1, and Q3 besting Q2. That’s bullish.
Chart 4
Data visualization by Miranda Halpern, created with Flourish
It’s nice to see European startups consistently raising more money, but Chart 4 serves to temper our expectations with a bit of perspective: All of these totals are still lower than they were in any quarter of 2021 and 2022.
On the other hand, unlike in Q1 and Q2, startups fared better than they did in Q4 2020. And VC activity in Europe is now higher than it was before the pandemic. Sure, there was some hype in the middle, but the “new normal” is better than before, and that’s good news.
But because dollar volume doesn’t tell the full story, we should also look at deal count.
Chart 5
Data visualization by Miranda Halpern, created with Flourish
Clocking in a total of 1,629 deals, European startups saw fewer deals being closed in Q3 compared to the previous quarter. These deal count numbers always lag behind reality, so they aren’t final, but from what we have, Q3 seems slower than any quarter since 2019. We broke the data down by deal stages to single out any one driver of this trend, but there doesn’t seem to be one. Venture dealmaking is fairly stable in the growth stage, but other stages have been declining in the last two quarters. So it seems it would be premature to talk of a recovery in Europe.
There’s still more work to do on our end to understand and present all the data from Q3, but these charts should provide a good foundation for you!