Startups struggle to raise funding

Diana Estefanía Rubio

Startups struggle to raise funding

2023 is on pace to be the lowest for venture funding since 2018. Global startup investment in 2023 reached $285bn, down from the $462bn invested in 2022, marking a 38% decline year over year and by less than 20% compared to the pre-pandemic years of 2018 to 2020.

The fall in tech stocks and a slowdown of the IPO market since the beginning of 2022 have tempered the industry. Layoffs across tech deepened in 2023. Other leading sectors that were down year over year include financial services (down over 50%), e-commerce and shopping (down 60%), and media and entertainment (down 64%).

The US, the largest startup investment market with about half of all venture funding, mirrored global trends. In 2023, funding for US-based startups totalled $138bn, down 37% year over year.

While most industries were down, AI was the largest sector that showed an increase. Global funding to AI startups reached nearly $50bn last year, up 9% from the $45.8bn invested in 2022.

The largest funding in 2023 went to OpenAI, Anthropic, and Inflection AI, which collectively raised $18bn in 2023. Semiconductors and battery tech also all saw increased investment in 2023.

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