Explained in 5 charts: Venture capital in 2023

Barely two weeks into the year, the 2024 startup news machine is running at full clip. A quick scan of TechCrunch headlines reveals venture funds adding new capital and startups that have either raised lots of money or are in the process of closing deals to raise lots of money.

We’ve gone over how venture capital investment fared across the world over the past few days, but today we wanted to provide a more comprehensive look at the numbers.

The TechCrunch+ team has charted data from PitchBook on venture capital investment flows across the world, and in the United States, Europe, Asia and Latin America. The following data visualizations include a full eight quarters of data, showing the come-down from 2021’s venture excesses through to the end of 2023.

We’ll start with the global picture and then talk through how each region did.

Global venture capital results

This chart doesn’t appear too dramatic at first glance. It’s clear that there’s been a steady decline in investment accompanied by a similar decline in total deal volume since Q1 2022. But we were left with a bearish impression when we first looked at the latest numbers, because venture investment in 2023 ($345.7 billion) had dipped to levels we’d last seen back in 2018 and 2019 — before the pandemic struck.

However, Q4 2023 was particularly bad: Q4 2017 was the last time we saw venture investment in the last three months of the year fall so low. That’s not good, especially as venture investment continued to drop in every quarter of 2023. Is 2024 not going to be the comeback year that many hope it will be?

In contrast, the United States’ venture capital market looks much better. Yes, there have been sharp declines since 2021 and 2022, but things have largely stabilized since Q4 2022.

It’s also worth noting how big the U.S. startup market has become compared to the rest of the world: Startups in the U.S. raised slightly less than 50% of global venture capital investment in the fourth quarter of the year. That is a far larger share than the 42% U.S.-based startups accounted for in Q4 2022, or the 38% share they claimed in Q4 2021.

This makes it clear that the global venture capital market’s contraction hasn’t affected all regions equally. As investment in other markets has dried up, the United States is reasserting its place atop the global venture capital scene loudly and clearly.

While investment in Europe in the fourth quarter of last year ($13.7 billion) was less than the $17.9 billion startups on the continent raised in Q3 2023, it was roughly in line with the first quarter, and better than what was recorded in Q1 and Q2 of 2020. In short, the European venture capital market is down, but not out. Sure, some folks likely hoped that the fourth quarter would come in just a little bit hotter after two quarters of improvement, but reality tends to be worse than most people expect.

Up top, I linked to two different startups raising venture capital, and one of those is still being closed. That latter startup is based in France, so we’re expecting to see a big round make a splash in Europe soon. Let’s see if the continent can regain some of its mid-2023 vigor in this quarter. Any declines from Q4 2023 could mark a material deterioration for this key startup market, however.

There is not that much positive to say about how venture capital investment panned out in Asia last year. Yes, the second quarter did see investment in the region recover from a series of steady declines, but soon afterward, things slid downhill again. What’s worse, the $19.8 billion that Asian startups raised in Q4 2023 is pretty low by the standards of the region. In fact, startups in Asia actually raised more than that in two quarters of 2016, two quarters of 2017, and in every quarter of 2018, 2019, 2020, 2021, and 2022. Asia is at a particularly low point today.

That’s not to say things won’t improve, of course. There was a time when China managed to surpass the United States in terms of total venture investment, for example.

Lastly, venture investment in Latin America seems to have reached a new plateau. Sadly, that plateau is worth about $900 million. For a region that raised $7.2 billion in Q3 2021, this has been a massive, painful retreat.

Still, these results are not out of the ordinary. Investment has trended pretty much at this level since 2017 (except in 2021 and early 2022). In short, the Latin American venture market hasn’t actually collapsed; it has simply reverted to its prior form.

We’re sure that’s not encouraging for founders in the region, but at least we’re not seeing investment fall below pre-boom levels. In fact, if you wanted to scare up some good news from the data, venture capital investment in Latin America today has actually improved a lot since 2016. Things are better than they were a half dozen years ago, but besides that, there aren’t many bright lights to point out.

On to 2024

We have no predictions yet about 2024, but we can say that startups would certainly like to see several things happen this year.

First, there’s a blatant need for more liquidity. Venture funds and founders alike are sitting on a mountain of illiquid wealth, and unlocking even some of that would help grease the venture gears. That could lead to more venture capital investment, full stop.

Then there’s the question of interest rates, and how quickly they may come down. The sooner that happens, the greater the chances we’ll see liquidity and more venture dealmaking. More when the Fed makes a move!