Lhe year 2023 has been difficult for venture capital, especially in Silicon Valley. The availability of funds is not improving. Global fundraising hit lowest level since 2015, says [le rapport établi par] PitchBook-NVCA with 161 billion dollars (nearly 149.60 billion euros) against 307 billion dollars in 2022, a 47% decrease [PitchBook est une société de données et de logiciels financiers. NVCA est l’association nationale des acteurs du capital-risque aux Etats-Unis].
Global venture capital funding fell from approximately $531 billion to approximately $345 billion, a decline of 35% ($186 billion) from 2022. In the summer of 2023, a VC firm venture, Countdown Capital, closed its doors and OpenView, a Boston-based investor, has laid off much of its staff. And two big names in venture capital in Silicon Valley, Sequoia Capital and Y Combinator, have quietly made layoffs, which is almost unheard of in the inner circle.
A year of bad news
The refocusing on generative artificial intelligence (GAI) like ChatGPT to the detriment of cryptocurrencies like bitcoin and metaverses (virtual worlds “explorable” in 3D with headsets) and the poor global economy with its high interest rates partly explain this situation. There’s also the impact of a year of bad news like the closing of Silicon Valley Bank and the bankruptcies of WeWork and FTX.
The valuation of unicorns, companies valued at more than a billion dollars, is also falling and fewer are being created. In 2023, only 44 North American companies became unicorns, according to PitchBook, compared to 195 new unicorns in 2022 and 360 in 2021
And start-ups that haven’t already disappeared are being urged by venture capitalists to tighten their belts and focus on profits rather than hypergrowth at all costs, which is the opposite of classic model of famous Silicon Valley success.
The virtual absence of IPOs in tech in the United States and a low number of mergers and acquisitions in 2023 have not helped matters because start-ups cannot sell themselves or raise more funds on the stock market. : they have difficulty surviving, as a result of the difficulty in refinancing.
High entry tickets
Some criticism of venture capital firms has emerged, notably in the wake of the Hollywood screenwriters’ strike in 2023 against AI and Silicon Valley’s “magical thinking.” This would push its illusory dreams of hyperbolic growth aimed at taking advantage of the herd instinct of small investors thanks to its culture of secrecy on the results of unlisted companies and its tendency to embellish deals before letting them fall (the “pump and dump”inflate then release) once sold.
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