2023 Forecast for Startup Funding
We have re-posted excerpts from three (3) interesting articles about startup funding in 2022 and 2023. Yes, it will be more difficult to raise funds in 2023. But it is also an opportunity for startups to focus on customer acquisition, build their valuation, and court merger opportunities. Clean Tech / Climate Tech have emerged as the best areas for 2023 funding. We have good reason to believe from past downturns that hardship drives serious entrepreneurs and innovation.
Axios Pro Rata
Read the entire article at Axios Pro Rata by Dan Primack 09JAN2023
Source: Giphy
Last January this space called the startup valuation peak. What followed was painful for many, as equity prices declined and jobs were lost.
Why it matters: Twelve months is an eternity for young companies, which means the time for wound-licking should be over. Founders now must choose caution or courage.
This isn't an argument for frivolity or wasteful spending.
Instead it's a reminder that, historically, the strongest startups have been those that grew through market tumult — innovating and grabbing market share while incumbents were preoccupied with Wall Street scrutiny.
Maybe the real "TAM" isn't quite what founders put on their pitch decks, but some percentage of it is still out there for the taking.
Crunchbase: 7 Predictions for 2023 Startup Funding
Read all 7 predictions at Crunchbase
Coming off a record-breaking 2021 for startup investment, this year has marked a hard reset to more normal times. As we head into 2023 with recession fears top of mind, here are a few of Crunchbase News’ top predictions for what the new year has in store, based on our reporting.
IPO markets will remain sluggish, but if anybody is going public it could be these companies. While market conditions remain crummy, there’s also a huge backlog of late-stage startups that have to find an exit at some point. With that in mind, we offered up ideas for 15 companies — ranging from logistics unicorn Flexport to grocery delivery app Instacart — that could be public-market candidates if and when the IPO markets open back up.
Expect more M&A as companies go bargain shopping: Speaking of exits, we could see more mergers and acquisitions in 2023, dealmakers predict. Although rising interest rates make capital more expensive, there are plenty of deep-pocketed buyers who already have money to spend and could go bargain-hunting as startup valuations drop, sources told Senior Reporter Chris Metinko.
Emerging Tech: Climate-tech funding in 2023
Read the entire article at Emerging Tech Brew
2021 was a record-setting year for climate-tech funding. The dollar amounts and deal counts for 2022 are still being tallied, but estimates range widely, from climate-tech funding dropping at about the same rate as VC investments overall, per PitchBook data shared with us, to the sector growing by nearly 90% year over year.
While new climate-tech startups are still forming and raising new rounds, Sclarsic said that there seems to be less of a rush to close those rounds, unlike last year when there was “kind of a feeding frenzy.”
Emerging Tech: VC 2022 Funding in Review
Read the entire article at Emerging Tech Brew
VC funding starts to drop. After the record-setting year VCs had in 2021, it really did seem like the VC funding chart could only go up and to the right. But Q1 2022 shattered that exuberant illusion, with investment falling by 13% year over year. And as public markets crashed and exit opportunities dried up, the trend only accelerated: VCs invested 27% less in Q2 and a whopping 53% less in Q3, as recession predictions changed from a matter of “if” to “when.” Funding fell by more than 50% in October, 69% in November, and 2022 is on pace to post a bigger year-over-year decline in VC funding than after the dot-com bubble and the Great Recession. It’s worth noting that there was a tremendous amount of money invested in startups in 2022—and record amounts of dry powder are waiting in the wings—but even still, this year represented a G-force level shift for startups, from “grow, grow, grow” to “hunker down.”—DM