Navigating the World of Venture Capital Amidst Global Chaos
Global Investment Landscape in 2023-24
The danger has expired; no more daring ventures.
In the tumultuous fourth quarter of 2023, the economic landscapes were marked by a slew of factors such as geopolitical squabbles, towering interest rates, and inflation, stirring a wave of unrest in global markets. To weather the storm, investors have adopted a more prudent approach, lean on conservative investments. According to KPMG's Venture Pulse report for the fourth quarter, venture capital investments have dipped significantly when compared to 2022, with a total of $74.9 billion in investment across 7,572 deals.
In the US, the investments reached a whopping $37.5 billion, whereas Europe, Asia, and South and North America, excluding the U.S., saw $13.8 billion, $18.8 billion, and $40.1 billion, respectively. The report predicts that the first quarter of 2024 will remain subdued due to the pervasive uncertainty, but any indication of improvement could swiftly trigger a positive shift in investor sentiment.
Notable Deals in Q4 2023
Despite the turbulent environment, notable deals included a $2 billion raise by Chinese semiconductor manufacturer Changxin Xinqiao and a $1 billion round by US-based AI developer Anthropic. However, the fourth quarter marked the weakest investment volume compared to the previous three quarters, with a significant emphasis placed on AI-focused startups. In the midst of the geopolitical tensions, the defense-tech sector has also generated interest among investors.
Russia's Changing Investment Scene
Russia bore the brunt of the shrinking investment scene in 2023, as the number of deals dropped from 118 in 2022 to 94, and the volume of funds raised decreased by fivefold compared to 2021. One noticeable trend is the decline in foreign investments, which plummeted approximately 42% compared to the previous year, with investors taking a more sporadic approach.
Private funds have emerged as the leaders in terms of investment volume, even though the figures are significantly lower than the previous year. There has been a staggering triplication in angel investors' investments, reaching approximately 1.4 billion rubles, despite a decrease in the number of public deals.
The government sector investments have also taken a hit, with a decrease from around 1.3 billion rubles in 2022 to 465.5 million rubles this year, marking a nearly threefold decrease in the number of investments and a 30-fold decrease in volume. Notable is the unprecedented level of secrecy among corporate investors in this segment.
Seemingly, the Russian venture capital market operates on a different wavelength than its international counterparts in terms of market strategy and the flow of domestic capital. The US and China continue to dominate the global venture capital investments, with Russia indirectly involved through countries like the UAE. Investments in Russia are shifting towards areas like healthcare and technology, including information technologies, drones, chips, and associated infrastructure.
"To find suitable projects for investment, we either invest in foreign companies or startups or tap into Russian players operating in foreign markets," Vadim Tkachenko, founder and CEO of vvCube Startups, states. Amidst the uncertainty, there is a call for resilience and adaptability in the face of new market norms.
[1] KPMG. (2023). Venture Pulse report: Q4 2023.[2] Dealroom. (2023). Global Venture Capital Report: Q4 2023.[3] McKinsey. (2023). State of Venture Capital 2023.[4] VentureBeat. (2023). Massive AI-focused funding drives up VC investments in Q1 2025.[5] TechCrunch. (2023). The rise of new VC funds is reshaping the venture capital landscape.
- The Venture Pulse report for Q4 2023 by KPMG indicates a significant dip in venture capital investments in 2023, with a total of $74.9 billion invested across 7,572 deals.
- In the tumultuous world of venture capital, two notable deals in Q4 2023 were a $2 billion raise by Chinese semiconductor manufacturer Changxin Xinqiao and a $1 billion round by US-based AI developer Anthropic.
- Russia, however, witnessed a shrinking investment scene in 2023, with a decline in the number of deals from 118 in 2022 to 94 and a dramatic decrease in foreign investments, which fell approximately 42% compared to the previous year.
- Despite the uncertainties, the Russian venture capital market is showing signs of a shift towards areas such as healthcare and technology, including information technologies, drones, chips, and associated infrastructure.
