2023 is indeed shaping up as a rough year for startups trying to raise venture capital.
The first half of the year brought a precipitous drop in venture activity in the Portland Metro. Deal volume was down 21% compared to the first six months of last year while the amount of money invested in startups sank 69%.
The data comes from the second quarter Venture Monitor report from Seattle research firm PitchBook and the National Venture Capital Association.
It also reflects the nation's troubles as the industry tries to adapt to an economy where interest rates are no longer near zero. The report notes that the current federal funds rate is 5.06%, the highest since 2007.
For the second quarter, investors pumped just $163.3 million into startups in the Portland metro. That was across 38 deals. In the same quarter last year, investors pumped $341 million across 38 deals into companies in the Portland metro.
Deal volume appears to be recovering somewhat from a huge drop in the first quarter, when only 25 deals happened, but check sizes are smaller, according to the data.
“For investors, the dominant themes of the past quarter have revolved around strengthening their existing positions and making high-confidence investments in new enterprises,” according to the report. “In the aftermath of the banking stresses of early 2023, extensive time is going into treasury management.”
That banking stress — the failures of Silicon Valley Bank and First Republic — did not leave Portland-area companies and investors unscathed. Many went through the high stress of whether the government would fully insure funds over the traditional FDIC threshold.
For the state of Oregon, $308 million was invested in the first half of the year across 78 deals. That's down from $729 million across 101 deals for the first half of 2022.
As venture capital investment becomes even harder to secure, there are other avenues for founders looking for capital to start and grow businesses. This week’s cover story looks at five alternate paths.
Nationwide, $85.6 billion was invested in the first half of this year across 6,514 deals, according to the report. That compares to $158.8 billion invested across 9,847 deals in the first half of last year.
“This shift in the landscape has impacted all sectors and stages of the venture ecosystem with deals, exits and fundraising well below the high-water marks set in the past few years,” according to the report. “Actors in both the public and private sectors are doing their best to adapt to the realities of a tighter market.”
