State of Private Markets: Q4 2023 | Carta

State of Private Markets: Q4 and 2023 in review

Authors:

Peter Walker, Kevin Dowd

Read time:

12 minutes

Published date:

February 5, 2024

While volatility diminished in 2023, fundraising activity in the startup ecosystem remained near recent lows in Q4 2023.

Executive summary
Q4 highlights
Key trends
Fundraising & valuations
Employee equity & movement
Methodology

Executive summary

During the rise and fall of an unprecedented bull market across 2021 and 2022, founders and investors had to navigate a wild ride of ups and downs. That volatility diminished in 2023. The startup ecosystem trundled along at a slow but steady pace, with activity near recent lows.

This new equilibrium involves fewer deals and fewer dollars. Total venture deal count on Carta was down 24% year over year in 2023, while cash raised by startups fell by 50%. But the fundraising that took place in 2023 proceeded at a steady pace. In each quarter, startups closed somewhere between 1,209 and 1,574 rounds and brought in between $12.8 billion and $20.3 billion in total capital.

Several facets of the fundraising scene shifted in 2023 in ways that will continue to impact founders and investors in 2024. Startups were forced to extend their runways longer than ever. Bridge rounds boomed in popularity. Series A valuations experienced a second-half surge. But the sort of seismic movements that shaped the venture landscape in recent years were fewer and farther between.

Q4 highlights

Down rounds remained elevated: The rate of down rounds across all venture stages landed somewhere between 19% and 20% every quarter last year, including 19.6% of all investments in Q4. These were the four highest quarterly down-round rates since the start of 2018.
Seed activity slumped: Startups closed just 462 seed investments in Q4, the smallest total since Q1 2018. Year over year, seed deal count is down 27%.
Late-stage valuations took a leap: In Q4 2023, the median pre-money valuation increased by 71% at Series D and by 46% at Series E+ over Q3 medians. These late stages had felt the brunt of the venture slowdown, with valuations plummeting in prior quarters.

Key trends

For now, Q4 was the slowest quarter of the year for venture dealmaking, with 1,209 new investments. That is the lowest quarterly total since Q1 2019. However, the total number of Q4 rounds will likely increase in the months to come as companies report additional transactions.

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Methodology

Carta helps more than 43,000 primarily venture-backed companies and 2,400,000 security holders manage over $3.0 trillion in equity. We share insights from this expansive dataset about the private markets and venture ecosystem to help founders, employees, and investors make informed decisions and understand market conditions.