Silicon Valley startups had their worst funding year since 2019

By Sarah McBride | Bloomberg

The value of venture capital deals in the US last year fell to levels not seen since 2019, according to new year-end data highlighting startups’ chaotic 2023.

Over the last 12 months, investors poured money into artificial intelligence startups, but the rest of the industry foundered. According to early data released by research firm PitchBook on Thursday, venture capitalists invested $170.6 billion in the US in 2023, over an estimated roughly 15,000 deals. That deal value is down by about 30% from 2022.

The VC industry also declined globally last year. Around the world, investors put $345.7 billion into startups, down 35% from what they spent last year and the lowest outlay since 2017.

Venture capital is an influential part of the global business ecosystem. Bets from VCs helped nurture transformative companies including Amazon.com Inc., Google and OpenAI. How venture dollars are raised and invested has an outsize impact on growth and innovation.

But spending has fallen precipitously since the pandemic boomtimes of 2021. “Everything is trying to find a balance,” said Kyle Stanford, venture capital analyst at PitchBook. Stanford said that the industry is still coming off recent years’ highs. Though VC dollars are typically only spent on companies that have a strong chance of becoming very large, there are currently about 54,000 venture-backed companies in the US, he said, a number he called “too many.”