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According to the latest data revealed by PitchBook, the $30.7bn in global exit value in Q1 of this year is the lowest it has been since the last quarter of 2016.
US venture capital (VC) funding in the first quarter of this year hit the lowest level since 2017 as VC dealmaking in global markets remained “relatively subdued” according to latest data.
PitchBook published a first look at some of its VC data today (3 April), which shows a relatively calm Q1 for US funding where few outsized deals were closed even as overall deal count stayed relatively high. PitchBook noted that there was a lack of outlier deals and that capital available has remained low.
“On a positive note, data shows that valuations did realise a slight uptick at the median across several stages,” PitchBook wrote. “This is likely due to relatively strong performance from public markets and slight multiple expansion, as well as a bias toward fundamentally strong companies’ continued ability to raise capital in the slow venture market.”
According to the VC investment data company, investors remain cautious in this environment because of continued uncertainties.
“Sticky inflation has pushed hope of interest rate cuts to the back half of the year, and recession remains a possibility. We don’t expect deal activity to pick up in a meaningful way in the near term.”
European VC also began the year slowly with deals valued at €16.4bn across nearly 2,400 financings. PitchBook said that the EU continues to grow “slower than hoped” and that this trend is adding pressure on company growth and investment in the region.
Late-stage and venture growth-stage valuations declined marginally according to the data, while seed and early-stage valuations continued to show their strength due to their distance from public markets.
There was no good news on the public markets front, as Europe for the seventh quarter in a row saw less than €7bn generated in exit value. Only three exits generated more than €100m in value, according to the first-look data.
“The inability for VC-backed companies to access the public markets, especially unicorns and other highly valued companies, has crimped returns and added to the challenging investment environment,” PitchBook wrote.
The US had two notable exits: Reddit and Astera Labs. Together, they accounted for nearly three-quarters of total exit value generated in the US through March.
“The prospect of increasing IPO [initial public offering] activity created buzz in the market narrative because of how slow exits have been for two years. While both IPOs performed well, and the companies held onto their debut performance, there remains uncertainty as to the prospects moving forward,” the company explained.
“Public market performance continues to be dominated by mega-cap tech stocks, and still unproven is investor appetite for high-risk, money losing companies that aren’t able to tell their story through the growth of AI. M&A during the quarter remained extremely difficult for large companies and a majority of transactions were immaterial in size.”
Globally, the $30.7bn in exit value is the lowest quarterly exit value since the last quarter of 2016.
“Large companies remain stuck private, weighing on returns of the market and putting added pressure on investment and cash runways,” PitchBook said.
Irish tech funding reached record levels in 2023, according to data released by the Irish Venture Capital Association in February. But funding levels dropped in the last quarter, consistent with a global decline in VC funding.
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