Venture capital activity in the U.S. continued to drop during the first few months of 2023, and Chicago was no exception, driven by inflation rates, bank failures and global instability, according to data released by PitchBook this week.
Local startups raised around 63% less from VCs in the first quarter of 2023 than they did a year ago.
VC firms invested just under $590 million in Chicago startups in Q1 2023 across 79 deals, both lows since 2020.
As the report indicates, the slowdown that started in the middle of 2022 continued to swell through the beginning of 2023. The steep decline is expected to only ratchet up the pressure for a startup world already grappling with layoffs, dwindling VC dollars, plummeting startup exits and the failure of Silicon Valley Bank, which was a key source of capital for startups around the nation.
There were just six startup exits for Chicago in the first quarter of 2023 for a total of $950 million.
"With IPOs unattainable (only 20 public listings occurred in Q1 [nationwide]), pressure continues to build within the ecosystem due to a high number of unicorns unable to realize returns for investors," the report said.
The report indicates that VC activity dropped in all stages and sectors in the first quarter of 2023.
Chicago's 79 deals for a little more than $590 million was also well below smaller metropolitan areas like Denver (79 deals for around $1 billion), Philadelphia (94 deals for around $700 million) and Washington, D.C. (80 deals for around $800 million).
For comparison, the Bay Area had 533 total deals for a value of around $15.5 billion, though its share of the deal count fell bellow 20% for the third consecutive quarter.
Here's a look at the top 10 Chicago-area venture capital funding deals from Q1:
- Kin — $109 million at an $859 million post-funding valuation.
- NanoGraf Technologies — $65 million at a $108 million post-funding valuation.
- NOCD — $34 million at a $204 million post-funding valuation.
- ClearFlame — $30 million at a $100 million post-funding valuation.
- KeyCare — $27 million at a $60 million post-funding valuation.
- Logiwa — $26 million at a $111 million post-funding valuation.
- Pathos — $20 million at a $120 million post-funding valuation.
- Trala — $19 million.
- Foxtrot — $19 million.
- Fintech Franchise Network — $18 million.
The PitchBook-NVCA Venture Monitor is a quarterly report produced by PitchBook and the National Venture Capital Association with support from Insperity, J.P. Morgan and Dentons.
