Cautious Optimism

CB Insights and PitchBook just released a series of macro statistics for the US VC in 1Q24.

The signals were mixed:

1) Funding

$34.2B, the highest value since 2Q23

Silicon Valley: 3.3x New York

2) Number of deals

2,430 vs. 2,950 on average in 2023

3) Number of new unicorns

8 vs. 9 on average in 2023

4) Top investors by startup count

Andreessen Horowitz: 33; General Catalyst: 32

5) Top equity deals

Anthropic: $2.8B; Epic Games: $1.5B

6) Exits

M&A: 725 vs. 783 on average in 2023; IPO + SPAC: 20 vs. 23 on average in 2023

7) Fundraising

$9.3B (the lowest funding value since 2016) vs. $20.4B on average in 2023

Here it is worth making a brief comment. It seems that the era of the humongous VC funds (of over $10B in commitments) — Softbank, Tiger, and Insight being the poster children — is ending. The decline in valuations decreases the need for capital. Thus, investors are writing fewer and smaller checks (less mega-rounds). On the other hand, secondary (GPs, LPs and direct) funds have been increasing at a staggering 60% yoy pace (not contemplated in the above figures).

Conclusion

We are now two years into the venture landscape correction.

Startups counts are high, funding is moderate, exits are low, fundraising is poor, and distributions are minimal.

But there are signals that the dark clouds over the VC market are dissipating. Without robust M&A and IPO markets, VC fundraising will hardly return to its 2021-2022 peak. However, the recent successful IPOs of Astera Labs and Reddit, along with the newly announced IPO of Rubrik (a Fabrica Ventures portfolio company), uphold a cautiously optimistic sentiment for the US VC market.