The global venture capital (VC) market saw a sharp decline in Q1’23 as predicted, with total VC investment falling from $86 billion in Q4’22 to $57.3 billion, according to the Q1’23 edition of Venture Pulse – a quarterly report published by KPMG Private Enterprise on VC trends globally. Major uncertainties, including the protracted war in the Ukraine, increasing interest rates, stubbornly high inflation, and domestic and geopolitical challenges took a toll on the markets and caused VC investment to decline year-over-year, with the total seen in Q1’23 less than a third of the total invested during Q1’22 ($177.6 billion).
The US, Asia, and Europe all saw their own significant drops in investment, with the US attracting $31.7 billion which accounted for more than half of the global total. Asia saw the largest decline of the three regions, with VC investment falling to $13.5 billion – the lowest level since Q2’15. Despite the difficult climate, alternative energy and cleantech companies still managed to attract large deals. For example, in the Americas, Generate Capital raised $800 million, while Europe saw Abound ($601 million) and Asia saw Zeekr ($750 million) raising some of the biggest rounds of the quarter.
The report concludes that investment in consumer retail and D2C companies will likely remain dry, whereas alternative energy and cleantech, defence, cybersecurity, and B2B services are all areas that are likely to be resilient, with generative AI an area that could see a spike in investment.
KPMG Private Enterprise is a global organization of independent professional services firms providing audit, tax and advisory services. With operations in 143 countries and territories, KPMG Private Enterprise is dedicated to working with businesses of all sizes and offers access to KPMG’s global resources through a single point of contact. This strategy of providing a localized touch and global reach is led by Conor Moore, Head of KPMG Private Enterprise in the Americas Region & Leader, KPMG Private Enterprise Emerging Giants Network, KPMG International. Jonathan Lavender, Global Head, KPMG Private Enterprise, KPMG International also expects the venture capital sector to gain momentum in the second quarter of this year, with generative AI potentially a focal point for investment.
