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January 05, 2023 | Tom Ballard

PitchBook offers insights into venture capital outlook for 2023

Hoping for funding this year? Check out these predictions for 2023.

The always insightful PitchBook issued several reports in the past few weeks that should be of interest to many readers.

In its “2023 US Venture Capital Outlook” report that came out just before the holidays, PitchBook made the following predictions for 2023:

  • The Morningstar PitchBook US Unicorn Index will show a negative return from January 1 through December 31, 2023.
  • Series C and D rounds will see the most down rounds, as these companies are currently the most starved for capital.
  • Seed stage start-up valuations and deal sizes will continue their ascent, reaching new annual highs despite a slowdown in total deal value and count.
  • SPAC (Special Purpose Acquisition Company) IPOs (Initial Public Offerings) and mergers will continue to decline while liquidations will continue to increase in 2023.
  • Venture growth deal value will fall below $50 billion in the U.S.
  • U.S. venture capital (VC) mega-round activity will fall below 400 deals, hitting a three-year low.
  • U.S. VC fundraising will fall between $120 billion and $130 billion in 2023.

The full report can be downloaded at the PitchBook link above. And look for the annual “Investor Outlook Series” featuring seven area investors that will begin in the near future.

The other report spotlighted the fact that the energy crisis that followed Russia’s invasion of Ukraine has accelerated demand for alternative energy sources, especially low-carbon ones that can be produced domestically at lower cost than imported fuels.

As PitchBook Senior Analyst John MacDonagh writes in this report, growing investment in clean energy supply chains and hefty government spending measures provide a foundation for future growth which he describes as “a fertile environment for start-ups in the space.” His key takeaways are:

  • Venture capital activity has been remarkably resilient, with $11 billion raised across 401 deals in the clean energy segment. That’s on pace to match the record set in 2021.
  • Intermittent renewable energy, especially solar, has outperformed relative to 2021. So have clean fuels, led by low-carbon hydrogen.
  • The “Inflation Reduction Act,” signed into law by President Biden in August, gives significant support to clean energy production. Its effects are already being felt.

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