US funding is resilient due to artificial intelligence and biotech investments
Early- and late-stage deal sizes grew last quarter, but seed-stage was near flat
Corporate venture capital activity has been steady in 2023
The excitement around artificial intelligence (AI) is still going strong: It continues to attract substantial investment activity, stabilizing global venture capital (VC) investments at $94 billion in the second quarter of 2023 (see Figure 1). That’s a marginal 1% decline from the previous quarter, only due to the outlier OpenAI and Stripe deals, coming in at around $10 billion and $6.5 billion, respectively, in the early months of 2023.
In the US, AI and biotech startups continue to garner interest from investors across all stages, particularly as economic headwinds seem to weaken. In fact, excluding the OpenAI and Stripe deals, US funding increased about 10% quarter over quarter.
Other countries are also picking up steam. India saw 62% quarter-over-quarter growth from a boom in private equity and corporate-funded startups. Korea and Australia attracted prodigious investments as well. China, on the other hand, saw a 22% decline in VC funding. Its central bank’s liquidity injection waned amid persistent economic sluggishness, global trade tensions, and tech and internet company regulations.
Average deal size and investments increased for early- and late-stage deals in the second quarter of 2023 (see Figure 2). Deal size grew by 8% and 42%, respectively. Seed-stage funding, however, was nearly flat.
Despite the overall slump in funding, deals involving corporate venture capital (CVC) accounted for 21% of all funding in the first half of 2023. In the second quarter, the number of CVC investors and CVC-funded deals remained stable (see Figure 3).