Raising funds through venture capital may prove even more challenging for startups this year than it was last year. This is because fundraising activities of investors were not very promising in the first quarter, as figures from Pitchbook show. According to the data, venture capital firms worldwide only managed to raise 30.4 billion dollars in the first three months, which was only about 16% of what was raised in the entire year 2023.

„Venture capital investors have had difficulties in the past two years in repaying capital to their institutional investors, which has led to only a few of these investors making new commitments in the current market environment", write the Pitchbook authors.

These difficulties arise, among other things, from the still subdued exit activities. For example, in the first quarter, only a few venture capital-funded startups dared to take the „golden path“ of going public – including social media platform Reddit, which successfully debuted on the NYSE in March. While the stock price was 34 dollars at the offering, it was nearly 48 dollars recently. Almost at the same time as Reddit, the California chip company Astera Labs also rang the bell, which, thanks to the AI boom, saw significant gains on the first day of trading and doubled its price to 73 dollars compared to the offering price. In early April, the US cybersecurity company Rubrik also filed for an IPO.

However, the few isolated cases do not seem to have raised great hopes for a widespread comeback for venture capital-backed IPOs. This also affects the heavyweights among venture capital firms such as the New York investment firm Tiger Global, which was particularly active in global startup investments during the boom year of 2021.

The firm, which is involved in companies such as the TikTok parent company Bytedance, the fintech Stripe, and the Singapore-based fast-fashion company Shein, closed its latest fund of 2.2 billion dollars last week, according to the Financial Times. When the firm launched the fund in 2022, the target was 6 billion dollars. By mid-2023, commitments were said to have reached around 2 billion dollars. Thus, in the remaining nine months, only 200 million dollars came together.

In a recent investor letter, Tiger Global is said to have expressed optimism. The largest investments - such as Stripe or Bytedance – are „performing well and should have the opportunity to go public once the markets are receptive again“, the company is quoted as saying in the report. Nevertheless, the investment company also emphasized their intention to remain „disciplined“ in their investments.

The recent figures from Pitchbook also show that startup investors worldwide have acted somewhat disciplined in the first quarter. By the end of March, 75.9 billion dollars had been invested in innovative startups through venture capital. This was nearly 22% of the volume of the entire previous year.