Venture Capital

Venture Capital in Flux: Navigating New Trends and the AI Investment Wave of 2023

The function of venture capital funds is to provide the capital to startup firms and small businesses showing potential for long-term growth. As is the case for hedge funds and private equity funds, venture capital funds must be careful in the deployment of capital in order to hedge risk while chasing positive returns. Hence, it is crucial to analyze the current investing landscape, and identify the latest trends and their impacts in the venture capital space in 2023.

VC funding has been falling overall since 2021. We saw a 43 percent fall in only one year in global seed and angel investment volume: from $12,2 billion in Q1 2022 to $6,9 billion in Q1 2023. In the same period, global early-stage investment dropped by 54 percent from $55,8 billion to $25.5 billion. Global late-stage and technology growth investment firstly collapsed for 63 percent from $93,4 billion in Q1 2022 to $34,4 billion in Q4 2022, but rose to $43,0 billion in Q1 2023.

The rise of climate tech startups and the role of VC

With growing awareness of climate change and a need for urgent action for its mitigation, climate tech has become an attractive industry for most investors. According to some sources, over the last decade, the combined enterprise value of global climate tech startups increased 56 times and is likely to continue to grow. A huge surge in investments in companies of such nature has completely reshaped the landscape of venture capital, making it vital to understand the underlying concepts of the high-growth industry that is climate tech. But what are climate tech startups exactly? And who are the key players in their growth?