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North American Startup Funding Ended 2023 With A Q4 Dip

NA Quarterly. Illustration of man with bag of $ going down an escalator while robot goes up. [Dom Guzman]

A down year has ended on a down note.

North American startup investors closed out 2023 with the worst quarter of the year, pulling back sharply on late-stage deals amid a weak exit environment.

For all of 2023, investment across stages totaled $144.3 billion –  a decline of 37% from the prior year. To put that in perspective, we charted out investment for the past 10 calendar years, color-coded by stage, below.

Table of contents

Adieu, Q4

The fourth quarter of 2023 was particularly weak in comparison to recent prior quarters. Investors pared back spending at all stages except for seed.

Altogether, investment totaled $29.3 billion for seed- through growth-stage rounds for U.S. and Canadian companies in Q4. That marks the lowest quarterly tally of the past three years.

For a sense of how Q4 compares, we charted out investment totals for the past 12 quarters below.

Fewer deals got done as well. For Q4, reported round counts across all stages totaled just over 2,200. That’s a decline of 16% from Q3 and 31% from the prior year. Below, we compare the deal counts for Q4 to the prior 11 quarters.

The pullback was particularly pronounced at late stage, where post-peak valuation declines and a lackluster IPO environment dampened dealmaking and round sizes. While we saw enthusiasm for hot sectors like generative AI, it was tempered by pullbacks in areas ranging from fintech to consumer products.

But while total investment is down, there were bright spots in the mix, including Q4 rounds that exceeded the $1 billion mark. In addition to AI, cleantech, biotech and next-generation manufacturing were among the areas where startups scored outsized rounds.

Below, we look at investment by stage, and also check in on the state of exits.

Late stage and technology growth

We’ll start at late stage, where dealmaking was comparatively muted in 2023, with no pickup in the fourth quarter.

For Q4, investors put $15.7 billion into startups and growth-stage companies at Series C and beyond, per Crunchbase data. It was a low point for the year.

Round counts also declined, with just 215 deals getting done in Q4, also a low for the year.

To get a sense how Q4 stacks up compared to previous quarters, we charted investment and round counts for the past five quarters below.

Still, there were some jumbo-sized deals at late stage in Q4. One standout was generative AI startup Anthropic, which secured up to $2 billion in funding from Google in October. Metropolis, an AI-enabled startup out to modernize the parking industry, was another prodigious fundraiser, pulling in a $1.1 billion Series C.

Early stage

Early-stage investment also declined in Q4. Overall, a total of approximately $10.3 billion went to just over 600 known rounds.

By both dollars invested and total rounds, it was the smallest quarterly tally in years, as you can see in the chart below.

It looks like 2023 was also not a high-flying year for early-stage dealmaking. Total investment around Series A and B stages came in around $50.1 billion, down 43% year over year.

For the fourth quarter, the largest early-stage rounds hailed from the biotech space. This includes a $245 million Series A for respiratory therapeutics developer Aiolos Bio, a $213 million Series A for genomics startup Tome Biosciences, and a $175 million Series B for drug developer Terremoto Biosciences.

Meanwhile, for all the buzz around generative AI, it didn’t factor heavily into the largest early-stage rounds. In Q4, just one company in the space, Together AI, landed a Series A or B round of $100 million or more.

Seed stage

Seed investment tends to be less impacted by market cycles than early- or late-stage. At this point, investors are making far-off bets on fledgling companies, so the immediate exit environment matters little.

Given this, it’s not entirely surprising that seed investment held up in the fourth quarter, with $3.3 billion in total funding, roughly the same as the prior two quarters. Even so, quarterly seed totals for 2023 remain well below prior years, as charted below.

In all of 2023, investors put a total of $13.7 billion into seed-stage deals, a decline of 32% from the prior year. It was the lowest annual tally since 2017.

Although seed financings tend to be on the smaller side, that’s not always the case. This past quarter, for instance,  Elon Musk’s artificial intelligence startup xAI picked up $134.7 million out of a planned $1 billion offering, according to a securities filing.

Another big seed round went to Austin-based Black Ore Technologies, a developer of AI automation for tax prep and other financial tasks, which closed on $60 million from a long list of prominent investors. And Philadelphia-based Vivodyne, which is working on AI-enabled testing for lab-grown human organs, secured $38 million in a seed round led by Khosla Ventures.


Of course, startup investing isn’t just about putting money into new companies. Backers also hope to eventually get money back, presumably through an acquisition or IPO.

Unfortunately, this past quarter wasn’t an especially lucrative one for returns. Acquisition activity was well below peak, and the IPO market was quite dull. To make matters worse, investors lost out on one of their largest prospective M&A returns ever in December when Adobe scrapped its planned $20 billion acquisition of design software provider Figma following pushback from antitrust regulators.

Nonetheless, there were a few sizable M&A deals and IPOs that came to fruition in Q4, highlighted below.


On the M&A front, the biggest fourth-quarter deal involving a private, venture-backed company came in December. Pharma giant Roche agreed to acquire Carmot Therapeutics, a Berkely, California-based developer of therapies for obesity and diabetes, for $2.7 billion plus up to $400 million in milestone payments.

Another big announcement came in October. Collaborative software giant Atlassian said it would purchase video messaging startup and one-time unicorn Loom for $975 million. The deal closed in November.

Yet another good-sized deal came from the insurance space. Travelers Insurance agreed to pay $435 million for Corvus Insurance, which specializes in cyber risk.


The fourth quarter was one of the slowest on record for startups making stock market debuts. Unlike Q3, which saw Arm Holdings, Instacart, and Klaviyo begin trading, there were no closely watched offerings and no multibillion-dollar initial market caps for venture-backed companies.

However, we did see a handful of new market entrants. One of the larger debuts came from Cargo Therapeutics, a developer of cancer therapies that went public in November and had a recent market cap around $800 million. Another was Lexeo Therapeutics, a genetic medicine startup recently valued on Nasdaq at around $400 million.

The big picture

As we bid farewell to 2023, investors are no doubt hopeful that the new year will bring better fortune when it comes to exits and portfolio company valuations. While 2023 had its up rounds and upbeat moments, funding tallies still clearly paint a picture of a down year.

So will things be headed up from here? As Yoda once said: “Difficult to see. Always in motion is the future.” For the optimists out there, however, there are some inklings of better times ahead, including an end-of-year stock market surge, greater odds of lower interest rates, and pockets of exuberance in sectors like AI, cleantech and genetic medicine.

Let’s hope that 2024, unlike 2023, will be the year the optimists get it right.


The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Jan. 3, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman

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