Global Venture Capital Outlook: The Latest Trends

Global venture capital investment activity remained stable in the third quarter of 2023, as startups in artificial intelligence (AI), sustainability, and the energy transition—especially electric vehicle infrastructure—continued to attract substantial investment, underscoring their disruptive impact. Overall, funding only declined marginally, down around 4% from the previous quarter (see Figure 1).

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

Sustainability startups, along with AI startups, also helped sustain investor interest in the US, even as the country continues to grapple with high interest rates and inflation. Meanwhile, India is facing its third consecutive quarter of decline after a 35% drop, but recent funding in fintech and electric vehicle startups in the market are a beacon of hope.

Several high-value deals, particularly in biotech and pharma, led to spikes in average deal size for seed- and early-stage funding, at 29% and 10% quarter over quarter, respectively (see Figure 2). Average late-stage deal size remained flat 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 the energy transition, although with less intensity than previous quarters (see Figure 3). Companies are more reticent to launch CVCs, as the number of new CVCs dropped from 14 to 6, hitting the lowest point in more than three years.

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