Venture capital raised by U.S. companies is on pace to hit a six-year low in 2023, and startups across all sectors and stages are feeling the crunch, according to PitchBook Data’s latest quarterly report on VC activity.
Those Chicago startups that are getting funding may want to count themselves lucky because venture capital deal activity is way down through the first half of 2023 — even at the seed stage, where deal value declined more than 26% in the second quarter from the prior one. And some expect the trend to continue through the end of the year.
VC firms invested $660 million in Chicago companies across 86 deals in Q2 2023, which is up from the $616 million invested in the first quarter of the year but way down from the 96 deals closed for just over $6 billion in Q2 2022.
In fact, the highs of 2021 and 2022 continue to impact the market today, as more than 14% of completed financings in the second quarter nationwide were at a lower valuation than the previous round for the same companies, the PitchBook data showed.
PitchBook analysts believe it is likely that down rounds will increase over the rest of the year as the market has become its most "investor-friendly in a decade." More rounds are being completed as extensions or runway top-offs, according to the report.
Nationally, deal activity for life sciences, a sector that Chicago has become a hot spot for in recent years, has fallen significantly from 2021, when there were 2,600 deals at a $54 billion value. Through the first half of 2023, there have been 903 deals for $14.2 billion.
Here's a look at the top 10 Chicago-area venture capital funding deals from Q2:
- StoicLane — $88.7 million
- Augmedics — $82.5 million Series D
- Fly.io — $70 million Series C
- Hallow — $50 million Series C at a $330 million valuation
- Booksy — $50 million Series C1 at a $530 million valuation
- PharmaCann — $36 million
- Obie — $25.5 million Series B at a $130 million valuation
- Paro — $25 million Series C at a $135 million valuation
- Visibly — $24.6 million Series B at an $81.5 million valuation
- Logik.io — $15.7 million Series A at a $60.3 million valuation
