U.S. venture capital deals fall to lowest since 2017 in first quarter: PitchBook | Wilnesh News

While hot artificial intelligence startups have received huge investments at huge valuations, the broader venture funding environment remains icy.

Data show that U.S. venture capital deal volume fell to its lowest level since 2017 in the first quarter data Published this week by PitchBook. The story was similar globally, with global deal volume reaching its lowest level since 2016 and total deal value falling to its lowest level since 2019.

The lack of deals suggests that venture capitalists remain largely on the sidelines despite a rebound in tech stocks last year and continued hype around generative artificial intelligence. Start-up funding soared to record levels in 2021, but then fell in the following two years as inflation fears and rising interest rates drove investors toward safer assets and forced money-losing tech companies to focus on efficiency rather than growth. Slowed down significantly.

The Fed said it may cut its benchmark interest rate in 2024, but it remains steady for now. Federal Reserve Chairman Jerome Powell said on Wednesday that policymakers will need some time to assess current inflation conditions, leaving the timing of a potential rate cut uncertain.

“Sticky inflation has pushed hopes of rate cuts to the second half of the year, with a recession still a possibility,” PitchBook analysts wrote in an email accompanying the company’s data. “We do not expect trading activity to be significant in the near term. Pick up.”

According to PitchBook data, the number of venture capital deals in the first quarter was 2,882, the lowest level since the third quarter of 2017. The value of these deals totaled $36.6 billion, down 62% from the peak of $97.5 billion in the fourth quarter of 2021. The latest quarter was broadly in line with last year’s third-quarter numbers, but was otherwise the lowest since late 2019.

Globally, the number of transactions was 7,520, the lowest level since the third quarter of 2016. Investment volume was $75.9 billion, the lowest level since mid-2019. Global venture capital firms have struggled to return capital to limited partners over the past two years, leaving many reluctant to invest again, analysts said.

Initial public offerings (IPOs) have brought some positive signals to the market.social media website Reddit and Astra LabsThe company, which sells data center connectivity chips to cloud and artificial intelligence infrastructure companies, launched an initial public offering in March, the first two venture-backed technology companies to go public in the United States since September. Data security software provider Rubrik filed an IPO prospectus this week.

According to PitchBook, Reddit and a week Accounting for 73.4% of total U.S. exits in the first quarter.

“The prospect of increased IPO activity has the market buzzing as exits have been slow for two years,” PitchBook analysts wrote.

watch: Y Combinator CEO Gary Tann talks Reddit IPO