1/18/2024: VC is Now an Investors' Market

Pitchbook just published its Q4 2023 Venture Monitor report. The total Q4 2023 deal value was slightly below the 2020 number and down more than 50% from 2021. This is expected. In fact, with ZIRP gone, I would expect the total deal value to tank further. But the report pointed out $17B out of the $170B was invested into Anthropic and OpenAI. Namely, the number was somewhat distorted by the AI frenzy. If hot AI deals were not included, the drop in deal value would have been even more dramatic.

According to the report, pre-seed/seed deal value/count declined sharply in 2023 but still exceeded pre-pandemic levels while Series A/B deal value/count fell back to the 2017 level. The report also mentioned that many startups will run out of money in 2024. This means there will be a lot of demand for venture capital in 2024 but AFAIK the supply won’t be able to meet the demand. We are likely to see capitulations on valuations for high-performing startups who are starving for cash. The low-performing startups who run out of money will simply die. It’s not going to be pretty but this readjustment is necessary for a healthy startup ecosystem. I  will try my best to support high-performing startups in 2024 but chances are not all of them are going to make it.