Global Venture Capital Outlook - Record funding rounds by OpenAI and Stripe stand out

As parts of the world welcome signs of spring, the venture capital (VC) funding winter stretches on. Continued geopolitical tension, stubborn inflation rates, macroeconomic instability, and banking sector turmoil have fueled anxiety among VC investors and sustained a slowdown in investment activity.

That said, global venture investments in the first quarter of 2023 surged 10% from the previous quarter to $95 billion, thanks to two big-ticket deals (see Figure 1). Record fundraising rounds by OpenAI, at around $10 billion, and Stripe, at around $6.5 billion, contributed to 37% quarter-over-quarter growth in the US. When excluding the outlier investments, however, US funding declined around 7%, and global funding dropped 9%.

China also saw funding increase in the beginning of the year, at 21% over the previous quarter. This resurgent growth was primarily fueled by the central bank’s liquidity injection of RMB 500 billion.

Globally, average early-stage deal size declined 13% from quarter to quarter (see Figure 2). However, seed-stage deal size ticked up around 7%, and late-stage deal size grew 15%, even excluding outlier funding by Stripe.

Deals involving corporate venture capital (CVC) accounted for 26% of all funding in the first quarter of the year, a notable bump from 20% in 2022, as activity remained stable despite overall downward trends. CVC-backed deals increased marginally from the previous quarter, and the number of corporate investors held steady in the low-300 level (see Figure 3).

Source: Bain & Company

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