In January 2023, global startup funding experienced a notable decline, with total investment exceeding $26 billion across more than 500 transactions. This represents a significant drop from the $61 billion recorded in January 2022. The downturn is attributed to various economic challenges, including inflation and a cautious investment climate among venture capitalists.
Key highlights of startup funding in January 2023
Total funding: Over $26 billion raised globally through 500+ deals.
Sector focus: Major sectors attracting investments included:
- artificial intelligence
- energy
- cloud cyber security
- healthtech
- consumertech
- fintech
Notable deals:
- DailyPay secured $260 million to expand its payment solutions, with funding sourced from a mix of credit facilities and loans.
- Zero-Error Systems raised $2.5 million for developing high-reliability integrated circuits for various applications.
- Ehiway received Series B+ funding for FPGA and embedded FPGA IP development, targeting multiple sectors.
- New Leap Technology attracted Series A investment for its RISC-V based SoCs aimed at digital control applications.
Regional insights
- In Canada, the government announced a CAD $169 million initiative to support commercialization of quantum technologies, part of a broader CAD $360 million investment plan.
- France’s Bpifrance and the National Research Agency launched a €100 million fund to bolster deeptech startups, aiming to foster innovation from research institutions.
Market trends
The overall funding environment in January 2023 indicated a shift towards fewer but larger deals, with investors becoming more selective. This trend reflects a broader cautious approach in the venture capital landscape, as many startups are adopting risk-averse strategies amidst economic uncertainty.
In summary, January 2023 marked a challenging period for startup funding globally, characterized by a significant decrease in both the volume and value of investments compared to the previous year.
Key sectors receiving funding
In January 2023, several sectors received significant funding as investors continued to focus on areas with strong growth potential despite an overall decline in venture capital activity. The most funded sectors included:
- fintech: This sector remained dominant, attracting the largest share of investment. It accounted for 67% of the funding in the Middle East and North Africa (MENA) region, driven by notable deals such as Tabby’s $58 million round.
- artificial intelligence: AI continued to capture investor interest, with various startups in this domain securing substantial funding.
- energy: The energy sector, particularly renewable energy and cleantech, saw increased investment, highlighted by Karm Solar’s funding round.
- cloud cyber security: As cybersecurity threats grow, investments in cloud security solutions have also risen.
- healthtech: This sector maintained its appeal, with several startups focusing on innovative healthcare solutions.
- consumertech: Companies in the consumer technology space attracted funding, reflecting ongoing interest in digital consumer services.
- foodtech: This sector showed resilience, buoyed by sustained investor interest in food ordering platforms and related technologies.
Overall, the funding landscape in January 2023 highlighted a clear preference for technology-driven sectors, particularly those addressing current market demands and challenges.