Q3’23 Venture Pulse Report– Americas

Fundraising remains muted across the Americas

Fundraising across the Americas remained quite muted in Q3’23, following a trend seen globally. The dearth of fundraising activity likely reflects a number of factors, including the incredibly high fundraising activity seen in recent years, a slowdown in deal speed causing a complimentary slowdown in the need to bring in additional capital, the lack of perceived exit opportunities, and high interest rates providing investors with alternative investment options.

Despite slowdown in VC investment, long-term optimism in Canada

VC investment slowed considerably in Canada during Q3’23 as VC investors grew more cautious with their investments, taking more time to make deals and putting more of an emphasis on finding companies with the right fit. Despite the slowdown, optimism remains quite strong in Canada given the strength of its innovation ecosystem and the growing maturity of startups, particularly in highlight attractive and resilient sectors like AI, cleantech, and health and biotech. Corporate investment continued to show strong resilience in Canada during Q3’23; at the end of the quarter, while total CVC investment was well off pace compared to the outlier years of 2021 and 2023, it was already ahead of the level seen in 2020 and well-positioned to match 2019’s total.

Brazil continues to attract interest from VC investors, despite soft Q3’23

VC investment in Brazil remained slow in Q3’23, driven primarily by global macroeconomic factors and a slowdown in the amount of time required to get deals done. Despite the current slowdown, VC investors and corporates have continued to show interest in the rapidly maturing startup ecosystem in Brazil and in the country’s market growth potential. Following on previous quarters, fintech continued to be the most attractive sector for investment in Brazil. During Q3’23, Brazil’s largest VC deals included a $100 million raise by real estate firm Loft and a $40 million raise by financial platform company Principial.

Cleantech solutions continue to attract interest

Energy and greentech continued to attract solid interest and investment across the Americas during Q3’23. The US attracted the largest deal in the space (Redwood Materials—$1 billion). Investment in Canada was also notable due to the broad diversity of greentech companies that attracted small-to-medium sized investments, including AI-powered sustainable technology firm Dcbel ($53 million), space-based GHG monitoring firm GHGsat ($44 million), decarbonization-focused company Carbon Upcycling ($26 million), plant-based seafood company Konscious ($26 million), and fusion power development company General Fusion ($25 million). In Brazil, VC investors also continued to show interest in the clean energy sector, particularly in solutions related to solar power—from production and commercialization to financing.

Trends to watch for in Q4’23

Looking forward to Q4’23, VC investment in the Americas is expected to remain relatively steady quarter over quarter. VC investment in AI is expected to remain incredibly robust, although there could be a growing focus on differentiating startups focused on truly innovative use cases of AI. Cleantech and energy will likely also continue to attract investment, in addition to fintech in Brazil and Latin America.

M&A activity is expected to remain quite dry in Q4’23. However, should IPO activity pick up in Q4’23 and Q1’24, M&A activity will likely follow suit—particularly in the US—as potential buyers gain more confidence in the valuations of possible targets.