Venture funding continued to fall in Q3, according to a new report from Pitchbook. VC funding was down 63% from the peak 2 years before, with just $73 billion closing in the latest quarter.
It’s Bad, And It’s Getting Worse
Funding fell even from Q2’s low level. Q3 funding was 10% below the $81 billion of deals done in the prior quarter.
The upshot: the market is not getting any better. And we don’t know when it will.
Across every region, the number of deals getting done is down by about half from 2021. The fact that deal count has fallen less than total funding makes sense. Those hedge fund megarounds into late stage companies are over.
Is An Upturn Around the Corner?
But I’m seeing what might be an upturn going on in the market right now.
I’ve seen more companies seeking funding so far in October than at any time in over a year. Perhaps the writing is on the wall — the market sucks, it’s going to keep sucking, so there’s no sense postponing our raise.
With generative AI, the opportunities are out there. A guy just made ChatGPT generate CNC machining code based on a drawing, for heaven’s sake!
To seize those opportunities, ya gotta raise. And that’s what startups are doing.
The Benefits of a Down Market
If you raise $1 million at a $8 million valuation today, versus $5 million at $30 million two years ago, that doesn’t feel good. But you’re still set up for success.
You can hire, advertise, and grow. And unlike two years ago, you’re not setting up unrealistic expectations by taking a monster valuation today.
If you have a great idea, I encourage you to build it and raise money. If you don’t, someone else will.
For investors like me, this is heaven.
Founders have better tools than ever before with AI, so there are more great companies out there than ever. And the valuations have not been this low in years.
I hope the down market continues for another couple of years so I can place more bets at today’s bargain basement prices!
Wrap-Up
Great companies are built every year, in good markets and bad.
If you’re a founder, you can create one today. If you’re an investor, you can back one today at a great price.
It’s time to move.
What do you see happening in the venture market? Leave a comment and let us know!
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