The big picture

Market predictions for venture capital funding in 2023 proved accurate, as the UK felt the effects of a global downturn in funding, attributed to high interest rates and a largely subdued stock market. However, an increase in funding during the final quarter of 2023 indicates a more promising outlook for 2024,
potentially offering a fertile environment for investors and entrepreneurs aiming to acquire, launch, or scale companies.

Key takeaways:

  • Pitchbook’s year end data for global VC markets reported a 47% decrease in VC fundraising compared to last year and described 2023 as “a tough year, in which VC deals, exits, and fundraising all plunged”.
  • Beauhurst reported that investment trends shifted, favouring the the AI and Life Sciences sector, while the Fintech and Blockchain sectors saw
    reduced investment activity. 
  • With valuations on the decline, there has been an uptick in down rounds, where companies secure funding at valuations lower than their previous
    rounds. To avoid such scenarios, more companies are opting for bridge funding at flat valuations, primarily from existing investors.
  • Pressure on valuations means more companies are making use of advance subscriptions and convertible loans as a means of raising
    capital without having to fix a valuation.