KPMG – Venture Pulse, 3Q 2023

KPMG's Venture Pulse, 3Q 2023 is a quarterly report that analyzes the current trends, challenges, and opportunities in the global venture capital market. The report focuses on the period from July 1 to September 30 and highlights the key findings and insights. During this quarter, global VC investment reached a low point due to various factors such as economic and geopolitical uncertainties, concerns about valuations, and a lack of exit opportunities. VC investors became more cautious, conducting thorough due diligence and prioritizing companies with clear paths to profitability. They also focused on improving the operational efficiencies of their existing portfolios. In terms of regional performance, the US and Asia experienced slight declines in VC investment, while European deal activity showed some improvement. Mega deals made a comeback in Q3’23, with US-based AI startup Anthropic raising an impressive $4 billion. Other notable deals included France-based battery producer Verkor raising $2.27 billion, China-based GTA Semiconductor raising $1.87 billion, Sweden-based H2 Green Steel raising $1.63 billion, and Chinese electric vehicle producer RoxMotor raising $1 billion. AI-focused startups continued to attract significant attention from VC investors, along with companies in the energy, electric vehicles, and cleantech sectors. In terms of IPO activity, the US saw some positive momentum with the IPOs of UK chip designer Arm, US grocery delivery company Instacart, and US marketing automation firm Klaviyo. However, a full rebound in IPO activity is not expected before mid-2024. Looking ahead to Q4’23, global VC investment is expected to remain soft, with AI remaining a compelling area of investment. The report also highlights the growing interest in AI opportunities and the need for additional regulation in the space. Other trends identified include the continued softness in fundraising, the slowdown in VC deal speeds, the focus on IPO readiness, and the ongoing decline in large, late-stage deals. Overall, the report provides valuable insights into the current state of the venture capital market and offers analysis on various global and regional trends.