SA国际传媒

After four consecutive down quarters, North American startup investors haven鈥檛 staged a definitive comeback yet. However, first-quarter numbers do show pockets of resilience, even as the general funding climate remains constrained.

North American funding in the first quarter reached $46.3 billion 鈥� a decline of 46% from the same period last year. That鈥檚 even including a reported $10 billion investment into 鈥� largely from 鈥� and a $6.5 billion round for payments giant . Without those two large deals, Q1 venture funding would have been down even more dramatically, with a more than 60% decline from the same period last year.

For a sense of how the just-ended quarter compares across all stages, we charted funding totals for the past nine quarters below:

As you can see above, early-stage and seed-stage investment were both down quarter over quarter, along with reported deal counts. A frozen IPO market and wilted public tech valuations also contributed to suppressing later-stage dealmaking.

For more detail, we break funding activity down by stage below, and also take a look at exit activity, which was also on the muted side.

Table of Contents

• Seed stage
• Early stage
• Late stage
• Exits
• The big picture
• Methodology
• Glossary of funding terms
• Further reading

Seed stage

Everything starts at seed stage, so we鈥檒l begin there too.

For Q1, reported seed-stage startup investment totaled $3 billion, the lowest quarterly tally in over two years. Overall, investment was down 9% quarter over quarter and 48% year over year.

For perspective, we chart out investment for the past five quarters below:

Even though things were down overall, we did see some companies raise big seed rounds. Examples include , a developer of authentication technology that ,听 , a social platform that , and , a fusion startup that .

Early stage

Early-stage investment was down too. In total, investors put $13.3 billion into deals at this stage in Q1, down 10% from the prior quarter and 53% from one year ago. Deal counts also declined.

To add some context, we chart out deal counts and funding totals for the past five quarters below:

In analyses of Series A and Series B funding trends published last month, we noted that declines are more pronounced for some sectors than others. Fintech, consumer products and Web3, in particular, are seeing less investment at the early stage.

Even with fewer big checks being cut, we did still see some big rounds. The largest funding recipients included , a machine learning startup that , , an energy storage company that , and , a clinical trials platform that .

Late stage

Next up is late stage, which accounted for the majority of investment in the first quarter.

Per SA国际传媒 data, $30 billion went to late-stage and technology growth rounds in Q1. That鈥檚 more than double Q4 totals, but still well below year-ago levels.

For perspective, we chart out deal counts and funding totals for the past five quarters below:

A cursory look at the chart above creates the impression that late stage is getting its groove back after a couple rough quarters. However, a closer analysis of the quarter’s biggest deals challenges that narrative.

Neither of the two biggest rounds of the quarter are traditional venture rounds for hot rising stars in the startup scene. OpenAI, which reportedly received a $10 billion investment backed by Microsoft, describes itself as a 鈥渃apped profit company governed by a nonprofit.鈥� Stripe, meanwhile, closed its massive $6.5 billion Series I in March at a valuation of $50 billion 鈥� far below its $95 billion peak value.

Beyond those two deals, there were no late-stage investments that came close to cracking the billion-dollar threshold. The next-biggest investments included a for human resources platform , a for AI and quantum computing company , and a for kidney disease treatment provider .

Exits

Things were also comparatively muted on the exit front. With the IPO environment still sluggish, we didn鈥檛 see any debuts in Q1 from companies lauded a few months ago as potential 2023 IPO candidates.

However, a few venture-backed companies did make it to market during the quarter, including:

• , a developer of solar tracker technology that is a subsidiary of contract manufacturer and counts among its backers, went public in February and had a recent market cap around $4.6 billion.
• , a developer of oncology therapies, listed on in late March after completing a SPAC merger and recently had a market cap around $2.8 billion.
• , a developer of carbon recycling technology, went public in February after completing a SPAC merger. Since then, shares have shed more than half their value.

On the acquisition side, meanwhile, 2023 has not been a very active year for big-ticket startup deals so far. However, we did see some good-sized M&A exits in the first quarter, including:

• , a prepaid wireless brand backed by actor , sold to in a valued at up to $1.35 billion.
• , a data integration platform, sold to software firm in February for $335 million.
• , a credit card-issuing platform, sold to fintech in a deal valued at up to $275 million.

The big picture

So what鈥檚 the broad takeaway from our Q1 numbers? For those hoping to see a big turnaround after several quarters of declining investment, that hasn鈥檛 panned out. However, it鈥檚 clear startup investors aren鈥檛 throwing in the towel either. Big rounds are getting done, hot areas like AI remain appealing, and some exits are still happening.

Will Q2 be the big turnaround? So far, markets are off to a rocky start in April. But who knows. We鈥檝e still got months to go, and the startup funding scene is, if nothing else, reliably unpredictable.

Methodology

The data contained in this report comes directly from SA国际传媒, and is based on reported data. Data reported is as of April 3, 2023.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. SA国际传媒 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to SA国际传媒 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. SA国际传媒 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. SA国际传媒 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Further reading

• Global VC Funding Falls Dramatically Across All Stages In Rocky Q1, Despite Massive OpenAI And Stripe Deals
• Asia Venture Funding Drops 57% Year Over Year, With Late Stage Posting Largest Decline

Illustration: Dom Guzman