Those hoping for a startup funding rebound in 2024 were out of luck last quarter.
The number of venture-capital deals in the first quarter fell to the lowest level since 2017. There were just 2,882 venture deals in U.S. startups last quarter, a 16% decline from the previous quarter and down 28% from the same time last year, according to venture-capital data firm PitchBook.
Startups raised a total of $36.6 billion in venture capital last quarter, which was 8% behind the previous quarter and 29% off from the first quarter of 2023.
Funds raised by venture-capital firms also experienced continued declines. VC firms raised just $9.3 billion last quarter, which is only 11% of the $81 billion raised in all of 2023. Last year was already a slow year for venture-capital firms raising funds after VCs raised $184 billion in 2021 and $188 billion in 2022.
Tiger Global, one of the most active venture-capital firms, announced this week it raised $2.2 billion for its latest fund, well short of the $6 billion it set out to raise when the fund was announced in 2022. Its previous fund, which closed in 2021, totaled nearly $13 billion.
PitchBook noted the downward trend in VC fundraising "portends to (limited partner) hesitancy toward VC, and should predict a more difficult dealmaking environment down the road."
Startup exits showed some positive momentum relative to recent quarters — thanks largely to the successful initial public offerings of Reddit and Astera Labs — but are still considerably off pace from the highs seen in 2021. Last quarter saw $18 billion in exit value from startups, 73.4% of which came from those two IPOs. The overall number of estimated startup exits last quarter hit 300, according to PitchBook, which would be the most quarterly exits since the first quarter of 2023.
The success of Reddit and Astera Labs could lead to more venture-backed startups taking the IPO plunge. But a separate report from PitchBook earlier this month found tech startups have "dramatically underperformed" the broader market over the past five years, which could lead to a slower trickle of tech IPOs in 2024 than one might imagine.
