Venture funding provided to startups in St. Louis and elsewhere in the U.S. fell again in the first quarter of 2023, but the drop off was less severe than prior quarters.
A report released Thursday by Pitchbook and the National Venture Capital Association tracked 12 startup deals in St. Louis totaling $63.3 million in the first quarter. That’s down from 16 deals and $185.4 million in funding for local companies in the year-ago period.
Nationally, the amount of funding pumped into startups continues to drop from record quarterly highs in 2020 and 2021. Investors provided $37 billion to U.S. startups in the first quarter, down from $41.1 billion in the fourth quarter of 2022 and $82.4 billion in the first quarter of 2022. Deal flow also declined, to 2,856, down from 3,586 in the prior quarter and 5,243 a year ago.
The first quarter of 2023 marks the fifth consecutive quarter in which venture funding provided to U.S. startups has dropped, though the falloff has narrowed somewhat in recent quarters. Venture funding in the first quarter was down about 10% from the fourth quarter of 2022, compared with quarter-over-quarter drops of 12% and 39% in the previous two quarters.
Pitchbook’s report said venture funding “dropped in all stages and sectors,” with notable decreases in angel and seed rounds and investment in software companies. Fundraising by venture firms for their own investment funds also fell off in the first quarter, the report said.
“Among traditional investors, 2023’s fundraising has been abysmal. Just $11.7 billion was raised in Q1. This quarterly and year-on-year decline is steep enough that it is hard to contextualize. Whether the trend will continue, or soon reverse, remains unknown,” the report said.
Notable raises for St. Louis startups in the first quarter included $15 million snagged by C2N Diagnostics LLC, a St. Louis-based biotechnology firm that created a blood test designed to help doctors detect Alzheimer's disease; $6 million in funding for Panome Bio, a newly launched St. Louis startup focused on providing research and development services for biotechnology and pharmaceutical companies; and $2 million in funding raised by both agtech firm Agragene and e-commerce software firm Atlas Digital Group.
