After the venture capital boom during the COVID-19 pandemic in 2021, the global capital raising market started showing signs of weakness in 2022. The downturn continued last year with high inflation, rising interest rates, and the gloomy economic outlook spreading fear and making investors less likely to invest.
According to data presented by Stocklytics.com, companies across the globe raised $565.2bn in 2023, or $40bn less than the year before.
Capital Raising Dropped by 17% in Two Years
Investments are a core pillar of economic growth, and easy access to fresh capital allows companies to develop new technologies and hire more workers. However, according to a Statista survey, 2023 was not a good year for capital raising, with companies across the globe finding it much harder than before to get fresh capital.
Last year, companies raised $565.2bn to launch, finance, and grow a business or a project. This included money from traditional VC services for startups and emerging companies and digital capital raisings like crowdfunding, crowd investing, crowdlending, and marketplace lending. Although more than half a trillion dollars sounds like a lot, this represents a significant decrease from the capital companies raised in years before.
Compared to 2022, global capital raising dropped by $40bn or 7%. However, the two-year drop is even bigger. Statistics show that global capital raising plunged by $118.4bn or 17% since 2021, and most of that drop came from traditional VC services.
Statista data show the traditional capital-raising segment has seen a downturn for the past two years, with the total value of fresh capital falling from $618.2bn in 2021 to less than $500bn last year. On the other hand, digital capital raising, including crowdfunding, crowdinvesting, crowdlending, and marketplace lending, has grown in this period, with the total value of capital going from $65.4bn to $66.3bn.
Average Deal Size Dropped by 25% Since 2021
The Statista survey showed the average dollar investment per deal had also significantly dropped over the past two years. In 2021, the average deal size was more than $14.7 million. Since then, this figure has fallen by almost 25% to $11.1 million last year.
In global comparison, the US capital raising market, as the largest globally, has seen the biggest downturn, with the total amount of fresh capital falling by 20% in two years to $299.5bn in 2023. Chinese market saw a 12% drop in this period, with the total value of raised capital falling from $148.6bn to $133.2bn.
The full story and statistics can be found here: https://stocklytics.com/content/companies-across-the-globe-raised-565-2b-in-2023-40b-less-than-a-year-before/
