Challenging start to the year for VC investment globally
Global VC investment fell to $57 billion in Q1’23—a particularly low note when compared to the high of $200+ billion seen in the same quarter just one year ago. Myriad factors combined to buffet the global VC market, from the protracted war in the Ukraine and other geopolitical uncertainties to concerns about the global banking system following the sudden turbulence seen in Q1’23. Stubbornly high inflation and still-increasing interest rates have also posed their own challenges.
Market challenges stifle VC investment in the US in Q1’23
VC investment in the US remained very subdued for the third consecutive quarter, falling from $40 billion in Q4’22 to $31 billion in Q1’23. The decline was driven by a number of factors, including the protracted geopolitical uncertainty globally, the continued rise in interest rates, the ripples caused by crypto sector challenges in 2022, ongoing concerns about tech sector valuations, and the recent turbulence experienced by the US banking system.
VC investors across the Americas becomes more cautious
Both VC investment and the number of VC deals in the Americas fell for the fourth consecutive quarter in Q4’22 as the level of investment fell in most jurisdictions, including the US, Brazil, and Mexico
VC investment in Europe sinks to four-year low in Q1’23
Macroeconomic conditions, the ongoing war in the Ukraine, high levels of inflation, and sky-high energy costs created a perfect storm of challenges for both companies and consumers in Europe. Both the number of VC deals and the total VC investment in Europe fell for the fourth straight quarter, dropping from $15.7 billion in Q4’22 to $9.8 billion in Q1’23. The decline was particularly stark when set against the record number of VC deals and VC investment seen during the same quarter in 2022.
Challenging time for VC investment in Asia during Q1’23
VC investment in Asia fell from $25.5 billion in Q4’22 to just $13.5 billon in Q1’23—the lowest quarter of VC investment seen in the region since Q2’15. The quarter was challenging from multiple angles, as several factors combined to stifle VC investment across the region. In China, a surging COVID-19 wave hindered VC activity in advance of its New Year holidays, while Hong Kong felt the impact of rising interest rates and a slowdown in IPO activity, and India saw investors becoming pickier with their investments. Only Japan saw increasing investment in Q1’23, although the total remained far below Q1’22