Global Venture Capital Outlook: The Latest Trends

by MMC
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Global venture capital investment activity remained stable in the third quarter of 2023, as startups in the areas of artificial intelligence (AI), sustainability and energy transition – particularly vehicle infrastructure electric – have continued to attract substantial investment, highlighting their disruptive impact. Overall, funding decreased only slightly, by about 4% from the previous quarter (see Figure 1).

In the UK, energy and transportation startups have secured high funding, contributing to 50% growth between the second and third quarters of 2023. Funding in China has also increased, albeit at a more modest pace by 9%, due to an influx of investments in semiconductors and sustainability-focused startups.

Sustainability startups, as well as AI ones, have also helped maintain investor interest in the United States, even as the country continues to struggle with high interest rates and inflation. Meanwhile, India is facing its third straight quarter of decline after a 35% drop, but recent funding into fintech and electric vehicle startups in the market is a glimmer of hope.

Several high-value deals, notably in the biotechnology and pharmaceutical sectors, led to an increase in the average deal size for seed and early-stage financing to 29% and 10% quarter-over-quarter, respectively. (see Figure 2). The average size of late-stage deals remained stable in the third quarter.

Current corporate venture capital (CVC) investors remain active, taking advantage of lower valuations and hot themes such as AI, sustainability and energy transition, although with less intensity than previous quarters (see Figure 3). Businesses are more reluctant to launch CVCs, with the number of new CVCs falling from 14 to 6, reaching its lowest level in over three years.



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