Every Part of Startup Fundraising Got Smaller in 2023

Every part of the startup fundraising journey got hit with a shrink ray in 2023.

Spending this final week of the year looking back over the most interesting trends in venture this year and dropping a few predictions for 2024.

Tying all these charts together with a bow in a 50-slide deck, available on this feed on Friday. Should be useful for investors, founders, LPs, and anyone who wants to present about startup market trends.

Okay - what happened with median round sizes and valuations?

Remember this is only primary round data (nearly 18,000 primary rounds actually) and strips out the confusing bridge/extension stuff.

𝗣𝗿𝗶𝗰𝗲𝗱 𝗦𝗲𝗲𝗱

• $3.2M cash raised on a valuation of $12.7M

• Both cash and valuation down from 2022, but under 10% in both metrics

𝗦𝗲𝗿𝗶𝗲𝘀 𝗔

• $9.7M raised on a pre-money valuation of $37.5M

• Again down from 2022 but only gently

𝗦𝗲𝗿𝗶𝗲𝘀 𝗕

• $17.7M raised on $83M valuation

• Here's where the decline kicks in heavy - both down about 30% from 2022

𝗦𝗲𝗿𝗶𝗲𝘀 𝗖

• $26M cash on $170M val

• Declined by at least 26%

𝗦𝗲𝗿𝗶𝗲𝘀 𝗗

• $35.6M cash on $222.7M val

• Ouuuuch. Down basically 50% this year

What does this all mean?

1. The gap between seed—A to late-stage has widened to a chasm. Seed rounds are valued 56% 𝗵𝗶𝗴𝗵𝗲𝗿 than they were in 2020, while Series D is 40% 𝗹𝗼𝘄𝗲𝗿.

2. Two reasons usually given for early-stage valuations remaining high. One - only the "best" companies getting funding now. Two - % ownership for the funds dictates valuation at the early stages, not any real company worth.

3. Founders growing up in this stricter environment will need to map out the cash they need to achieve scale with greater accuracy. The big open question is can startups who have pivoted towards profitability grow fast enough to justify venture-scale valuations?

Prediction: these late-stage valuations are untenable for many growth-stage startups. They either need to pop back up (please bring us IPOs, 2024) or even a recapitalization might not make sense for many Series B-C companies.

Thanks for reading this far :) as a reward, comment with your industry below and I'll share a chart like this one for your sector specifically.

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