The end of 2023 remained slow for venture capital funding in Massachusetts, with total deals, exits, and capital invested in the state’s startups tallying well below last year’s figures, according to a new report from Pitchbook and the National Venture Capital Association.
Massachusetts firms saw 200 total deals in the fourth quarter of 2023, up from 181 in the third quarter. Despite the upward swing, total deal activity is still low. Q3 and Q4 of 2023 saw the lowest number of deals since the third quarter of 2018.
Capital funding to Massachusetts firms was also down quarter-over-quarter and year-over-year. Massachusetts companies brought in $3.17 billion in Q4 2023 down from $5.14 billion in Q3, and $4.6 billion in Q4 2022. In all, 2023 funding came in at $15.9 billion, down from $21.5 billion in 2022.
2023 was overall a slow year for venture capital activity nationwide. Though nationally deal counts remained relatively flat, deal value has continued to fall from historic levels in 2021 and 2022.
The year-end data mostly continues the trends already evident by the first half of the year.
Across all markets, the top pressures on the funding environment have been higher interest rates and increased political risk, especially abroad, according to Pitchbook.
While Pitchbook stopped short of declaring the market in crisis, it's not expecting a frenzy of new activity in 2024 either.
Pitchbook predicted that merger and acquisition deals will pick up this year, however, the high interest rates will likely prevent a full return to 2022 numbers. Profitability will be a main focus, the data company said.
Artificial intelligence will still drive investment, and the cleantech industry will continue gaining momentum, and funding, Pitchbook predicted.
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