Wilson Sonsini | The Entrepreneurs Report – Private Company Financing Trends for Q3 2023

The key developments of the report are summarized below.

Later-Stage Valuations Drop

Q3 2023 saw a decline in start-up valuations across multiple stages, especially for Series B and Series C and later companies, which retreated to five-year lows. Despite the decline, Seed stage 2023 valuations continue to fare better and are on track to surpass 2022’s record-setting levels.

Mixed Results for Early and Late-Stage Fundraise Amounts

In Q3 2023, Series Seed to Series B start-ups experienced a decline in fundraising amounts after Q2’s uptick. Series B start-ups, in particular, saw a significant drop in median raise amounts, reaching lows not seen since early 2016. In contrast, Series C and later-stage companies demonstrated an upward trend in median raise amounts, despite  remaining lower than any non-2023 quarter since 2019.

Down and Flat Rounds Are Prevalent

There was a notable increase in the overall percentage of down and flat rounds in Q3 2023 after a decline in the previous quarter. Nearly half of the fundraising companies  resorted to down or flat rounds during Q3 2023, marking the highest percentage observed in over a decade.

SAFE and note trends are mixed

In Q3 2023, earlier pre-Seed convertible note funding amounts increased, while post-Seed bridge funding amounts decreased. High interest rates affected both stages, and  most notes are maturing within a year. Early-stage companies also faced challenges securing large pre-Seed SAFE rounds.

To read the full report, click here.

Compliments of Wilson Sonsini – a member of the EACCNY.