Global Startup Investment Report (2023)

Executive Summary

In 2023, the landscape of global startup investments witnessed a significant downturn, marking the lowest level of venture funding since 2018. Total investments in startups around the world amounted to $294 billion, reflecting a substantial decrease of 38% compared to the previous year's $462 billion.

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Quarterly Investment Overview

• Q1'23: €81 Billion
• Q2'23: €68 Billion
• Q3'23: €76 Billion
• Q4'23: €58 Billion

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This downward trend highlights a cautious approach from investors amid a changing economic environment.

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Positive Outlook Amidst Decline

Despite the overall decrease, 2023’s funding levels were less than 20% lower than the average seen during the pre-pandemic years (2018-2020). This comparison offers a silver lining, indicating resilience in the startup ecosystem.

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AI: A Beacon of Growth

In an otherwise sluggish year for investments, AI startups emerged as a notable exception. AI investments accounted for nearly 20% of all funding in 2023, a significant increase from 12% in 2022. The total investment in AI startups approached $64 billion, showing a 9% rise from the previous year's $54.8 billion.

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Generative AI: The New Frontier

Generative AI (GenAI) is transforming the AI sector, evolving from data-driven tasks to creative applications in text, images, and more. Over the last five years, GenAI has attracted over $26 billion in funding, with the United States leading in venture capital contributions.

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Industry Impact

• NVIDIA: Shares soared by over 100% in the first half of 2023, underscoring the market's optimism in AI technologies.
• Market Disruption: Companies like Chegg experienced significant losses, illustrating the disruptive potential of GenAI.

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Investment Trends in GenAI

• Early Stages: There has been a consistent rise in investments since 2016, with Generative AI startups seeing double the median Series A round size compared to other sectors.
• Breakout and Late-Stage Funding: This category witnessed a 5x growth from 2020 to 2022, peaking in 2023.

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Key Segments in GenAI

• Model Makers: Dominated by companies like OpenAI. Verticalized models are emerging in sectors like health, fintech, and legal tech.
• Applications: GenAI finds diverse use cases, split between proprietary and third-party models.
• Infrastructure Needs: Prompt engineering to MLOps, driven by rising GenAI usage.