Omar
Marques
|
Lightrocket
|
Getty
Images
Even
with
hot
artificial
intelligence
startups
scoring
hefty
investment
rounds
at
massive
valuations,
the
broader
venture
funding
environment
remains
ice
cold.
Deal
volume
for
U.S.
venture
investments
in
the
first
quarter
sank
to
its
lowest
level
since
2017,
according
to
data
published
this
week
by
PitchBook.
The
story
was
similar
across
the
globe,
with
worldwide
volume
reaching
its
lowest
since
2016
and
total
deal
value
falling
to
a
level
not
seen
since
2019.
The
dearth
of
dealmaking
shows
that,
despite
a
rebound
in
tech
stocks
last
year
and
continuing
hype
around
generative
AI,
venture
capitalists
are
still
largely
on
the
sidelines.
Startup
financings
soared
to
record
levels
in
2021,
before
slowing
dramatically
the
following
two
years
as
inflationary
concerns
and
rising
interest
rates
pushed
investors
into
safer
assets
and
forced
money-losing
tech
companies
to
focus
on
efficiency
over
growth.
The
Federal
Reserve
has
indicated
that
cuts
to
its
benchmark
interest
rate
are
likely
coming
in
2024,
but
for
the
moment
they
remain
steady.
Fed Chairman Jerome
Powell said
Wednesday
it
will
take
a
while
for
policymakers
to
evaluate
the
current
state
of
inflation,
keeping
the
timing
of
potential
interest
rate
cuts
uncertain.
“Sticky
inflation
has
pushed
hope
of
interest
rate
cuts
to
the
back
half
of
the
year,
and
recession
remains
a
possibility,”
PitchBook
analysts
wrote
in
an
email
accompanying
the
firm’s
data.
“We
don’t
expect
deal
activity
to
pick
up
in
a
meaningful
way
in
the
near
term.”
There
were
2,882
venture
deals
in
the
first
quarter,
the
lowest
since
the
third
quarter
of
2017,
according
to
PitchBook.
The
value
of
those
deals
totaled
$36.6
billion,
down
62%
from
a
peak
of
$97.5
billion
in
the
fourth
quarter
of
2021.
The
latest
quarter
was
about
even
with
the
number
from
the
third
quarter
of
last
year,
but
otherwise
marks
the
lowest
since
the
end
of
2019.
Globally,
the
7,520
deals
were
the
fewest
since
the
third
quarter
of
2016.
And
at
$75.9
billion,
investment
was
the
lowest
since
mid-2019.
The
analysts
said
VCs
across
the
globe
have
had
trouble
returning
funds
to
limited
partners
over
the
past
two
years,
which
has
made
many
reluctant
to
reinvest.
Some
positive
signs
for
the
market
came
in
the
form
of
IPOs.
Social
media
site
Reddit
and
Astera
Labs,
which
sells
data
center
connectivity
chips
to
cloud
and
AI
infrastructure
companies,
held
their
debuts
in
March,
the
first
two
venture-backed
tech
companies
to
go
public
in
the
U.S.
since
September.
Rubrik,
a
data
security
software
vendor,
filed
its
IPO
prospectus
this
week.
According
to
PitchBook,
Reddit
and
Astera
made
up
73.4%
of
the
total
exit
value
in
the
U.S.
in
the
first
quarter.
“The
prospect
of
increasing
IPO
activity
created
buzz
in
the
market
narrative
because
of
how
slow
exits
have
been
for
two
years,”
the
PitchBook
analysts
wrote.
watch
now
