Diving into Data: 2022 vs. 2023 Fundraising Landscape
Pre-seed and seed-stage valuations have stayed consistent from 2022 to 2023 – however, the valuations of bridge rounds notably decreased. Bridge rounds also decreased in frequency.
One of the most striking changes in our data relates to fundraising timelines. The average fundraising timeline for an SPV was twice as long in 2022 versus 2023. Overall, this indicates a healthy rise in investment activity and signs of new life in venture after a shaky 2022. Although valuations have not changed significantly at the early stage (where most of our customers invest), the significant reduction in fundraising timelines is encouraging for both founders and managers looking to raise capital.
Another notable change is the decrease in bridge rounds. In 2022, there was a rise in bridge rounds across the board, but particularly for Seed and Series A companies. This trend was based on a perceived scarcity of capital and fear that capital would not be available in six to twelve months. In the first 8 months of 2023, bridge rounds decreased by 50% as compared to 2022. This signals increased confidence amongst early-stage founders that capital will be available in six to twelve months when they go out for a proper Seed, Series A, or Series B round.
Median valuations in the early stages remain flat at approximately $20M.
The fundraising timeline in 2023 is 37% shorter than in 2022.
In 2022, managers spent on average 2 months fundraising for SPVs.
In 2023, managers are spending an average of one month raising for SPVs.
Bridge rounds have decreased by more than 50% from 2022 to 2023.
Median Valuation 2022: $20 million
Median Valuation 2023: $19 million
We do not consider this change to be statistically significant. Rather, it’s best to consider median early-stage valuations to have remained flat from 2022 to 2023. This is a stark contrast to recently published late-stage fundraising data, which shows big hits being taken to median valuations from Series B onward.
Bridge rounds have decreased by 63% from 2022 to 2023.
In 2022, bridge rounds represented 11% of all rounds within our data set. The average valuation of a bridge round was approximately $54M, with e-commerce being the highest-represented industry. The average fundraising timeline for a bridge round in 2022 was 39 days.
In 2023, bridge rounds represented 4% of all rounds within our data set, down more than 60% from 2023. The average valuation of a bridge round was approximately $39M, with healthcare being the highest-represented industry. The average fundraising timeline for a bridge round in 2023 was 32 days.
FUNDRAISING TIMELINES and DEAL LIFECYCLE:
The average timeline from deal launch to wire out in 2023 is 37% shorter than 2022
2022: Approximately 60 days, or roughly 2 months.
2023: Approximately 37 days, or a little over 1 month.
In terms of relative duration, the timeline in 2022 was twice as long as 2023.
General Trend: At the start of 2022, the average fundraising timeline for an SPV was notably higher. There's a clear downward trend in the average duration from the beginning of 2022 until around mid-2023.
Initial Decrease: There was a significant decrease in average fundraising timelines in mid-2022, suggesting that investment deals were closing faster during this period.
Stabilization: In the second half of 2022, fundraising timelines held relatively steady with minor fluctuations.
End of Period: By mid-2023, the average fundraising timeline stabilized between 30 and 40 days. This suggests that deal managers were able to fill their allocations more efficiently than in 2022.
The cadence of decision-making and investment execution has increased considerably over the last three quarters. This is a good sign for private market health and indicates that activity levels will start to return to 2018/2019 levels. This may also point to an increase in competition at the early stage as investors are pushed to meet fundraising timelines for competitive deals.