What to Expect for Venture Capital in 2024: Looking Backward at 2023 to Inform How to Look Forward to 2024

Louis Lehot
3 min readJan 26, 2024


Most startup founders will tell you that securing funding in 2023 was challenging, to say the least. Due to many contributing factors, venture capital investors pulled back on investments and became much more strategic regarding where they deployed capital. What happened last year, and what does it tell us about next year?

What happened in 2023?

Just how much funding fell last year is outlined in C.B. Insights’ recent State of Venture 2023 Report. The report notes that dealmaking and funding totals fell to six-year lows in 2023, with Q4 marking the harshest quarter for global V.C. in six years. A few areas remained resilient, such as A.I. and sustainability-focused startups, but overall, global deal volume fell significantly.

Below, we look at some key findings from the report and the overall state of venture capital last year.

  1. Venture funding fell to $248.4 billion, the lowest number since 2017. Deal volume also fell 30% year over year. The exception here is fintech and retail tech, which saw minor funding gains in the last quarter of 2023.
  2. In an even more significant drop, U.S. deal volume hit a 10-year low, with US-based companies only raising 2,182 equity deals in Q4. This is the lowest quarterly level since 2013.
  3. Late-stage deal size is shrinking. In fact, it has fallen more than 50% since 2021. The median size of a late-stage deal is now $21 million, whereas that number was $50 million in 2021. Mega rounds also dropped off in 2023, reaching the lowest level since 2017.
  4. IPOs did not fare much better, with 2023 seeing the fewest annual V.C.-backed IPOs since 2013. There were less than 200 globally last year, and the U.S. seems particularly closed. While the M&A deal volume is down from its 2021 peak, it remains historically high, with 8,351 deals in 2023.
  5. Unicorns were also hard to come by in 2023. This year produced only 71 new unicorns, marking a seven-year low and a 73% decline from 2022. Of the 71, 35 were US-based companies, with Asia and Europe rounding out the top three areas for unicorns.
  6. In one brighter bit of news, generative A.I. and sustainability tech attracted investors last year. They made up the majority of top deals in Q4 as investors look to long-term returns.

For those who have been closely watching venture capital activity over the past year, this report should come as no surprise. The deck has definitely been stacked against founders, with inflation, interest rates, and many other economic factors contributing to a decline in funding and a need for exit options.

What is there to be optimistic about for 2024?

Despite all of the grim news from 2023, there is a growing feeling that the outlook for 2024 is showing green shoots:

  • Inflation has subsided to below 3% in December 2023 from above 5% in December 2022.
  • Lower inflation should mean lower interest rates and decreased premiums for new issues of debt instruments.
  • Lower interest rates for debt instruments should incentivize investors to chase higher returns.
  • Supply chains have been onshored and reinforced.
  • Unemployment remains at historic lows.
  • According to the Wall Street Journal, U.S. airlines carried 13% more passengers in the first ten months of 2023 over the same period in 2022, while airfares were 5% lower (citing U.S. Bureau of Labor Statistics data).
  • Oil prices are down, and U.S. oil production continues to climb.
  • Demand for new housing continues to soar.
  • Demand for semiconductors continues to grow, and the U.S. government is incentivizing the onshoring of new fabs.

All of this should mean a “risk on” investment environment, which is ideal for venture capital.

The state of V.C. could look much different this year. Hopefully, we will look at a much more encouraging end-of-year report in 12 months.



Louis Lehot

Louis Lehot is a partner and business lawyer with Foley & Lardner LLP, based in the firm’s Silicon Valley office. Follow on Twitter @lehotlouis