Three Startup Fundraising Trends to Watch From Q1 2023

New numbers 📈 - what happened to startup fundraising in Q1 2023? Top 3 trends to watch:

Data explainer: all data comes from rounds completed by companies on Carta cap table (35,000 startups and counting). Includes only US startups.

1. 𝗧𝗮𝗹𝗲 𝗼𝗳 𝘁𝘄𝗼 𝗰𝗶𝘁𝗶𝗲𝘀: 𝗺𝗲𝗱𝗶𝗮𝗻 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻𝘀 𝗯𝘆 𝘀𝘁𝗮𝗴𝗲

Seed-stage valuations drifted down (from $13.8M to $13M) over the last quarter. Valuations for Series A and Series B companies actually rose slightly!

But for Series C and beyond, the doldrums continued. The decline in super-late VC (Series E+) is just remarkable. The market has gone from minting unicorns to a shrinking stasis. The reopening of the IPO market cannot come soon enough.

2. 𝗘𝘃𝗲𝗿𝘆𝗯𝗼𝗱𝘆 𝗴𝗲𝘁𝘀 𝗹𝗲𝘀𝘀 𝗰𝗮𝘀𝗵

Here's a quick look at how much smaller VC rounds have gotten lately. The peaks in the list below are all either late 2021 or early 2022. Data is median cash raised in a given round:

𝗣𝗲𝗮𝗸 --> 𝗤𝟭 𝟮𝟬𝟮𝟯 Seed: $3.6M --> $3.1M (-14%) Series A: $12M --> $6.9M (-43%) Series B: $30M --> $12.9M (-57%) Series C: $60M --> $22M (-63%) Series D: $96M --> $20M (-79%)

Those are serious reductions. As an aside, the falling round sizes are a key reason why I discount the "dry powder has to be coming soon" theory. Billions simply cannot be invested into seed rounds and the other stages aren't pulling their weight anymore.

3. 𝗩𝗲𝗹𝗼𝗰𝗶𝘁𝘆 𝗶𝘀 𝘁𝗵𝗲 𝗵𝗶𝗱𝗱𝗲𝗻 𝘀𝘁𝗼𝗿𝘆

We don't have final numbers on total rounds and total capital invested yet.

But all indications point to a molasses dealmaking pace last quarter. Deals that happen are taking much longer to close and fewer deals are happening across the board. I'm sure the SVB headaches dented Q1 volumes as well.

Hope this early data proves helpful for anyone currently fundraising.

Hit the comments for a link to the full First Cut report (and a way to get the even more dense version when it's live later this month).

#cartadata #valuations #q12023 #startupfunding #fundraising #startups