Full report on Q1 2023 data

The key insight this week

The Carta State of Private Markets: Q1 2023 report is live. Let's run through some headlines.

Fewer rounds are happening with less invested per round.

This dynamic means total investment into startups has fallen substantially (down 80% vs Q1 2022). It creates a scenario in which the average time between a seed round and Series A is 833 days - or 2.3 years.

We've also seen a retreat from less mature venture ecosystems. Investment is still continuing, albeit at a slower pace, in places like San Francisco and New York. We have seen a relatively greater pullback in places like Chicago, DC, and Colorado.

The rounds that are happening have strings attached.

Bridge rounds (rounds raised with the same series name as the prior round, often something like "series-a-2-preferred') made up over 40% of Series A rounds in Q1. These bridge or extension financings are often done to avoid a down round - but those too are up to record levels.

Unsurprisingly, founders are dealing with more difficult, investor-friendly terms. Almost 16% of deals in Q1 had participating preferred stock for the investor, a far cry from Q1 last year.

Valuations are flat or slightly up from recent lows.

Perhaps it's due to the fact that only the best deals are getting done - but valuations have stopped declining across most venture stages. Small relief? Sure. But we'll take silver linings where we can get them.

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Peter Walker

Carta Insights