startup funding health check, November ’23

funding landscape

There’s lots of doom and gloom narrative out there about the funding landscape for early stage funding. As a business that’s at the heart of startup funding (does anyone invest any earlier) here’s our thoughts on the latest landscape and what this looks like for investors and founders at the pre-seed stage.

Headline stats

  • Investor caution remains over the cost-of-living crisis and the high interest rate environment impacting the UK economy.  There was some hope that the ‘halo effect’ of several tech IPOs in the US trading well could ignite appetite, but venture investment trends instead dipped, per preliminary data from Pitchbook.
  • Crunchbase reported thatboth seed and early-stage funding showed the steepest decline year over year compared to all other stages: Crunchbase Active Lead Investors in the US – including Andreessen Horowitz, Insight Partners and Lightspeed Venture Partners were more active, giving a barometric indicator of hope that this may cascade down into the early stage funding in the next quarter.
  • There are exceptions as always – startups building in the AI realm are raising money in a manner and speed that’s at odds with wider trends. AI companies raised +$10bn in Q3, on par with Q2, Crunchbase data shows. The largest AI rounds went to Open competitor Anthropic, raising $1.3bn from Amazon and committed to using AWS and Amazon’s inhouse chips to train models. 


  • Broadly, these statistics of active investors and AI funding paint a mixed picture of the state of startup funding. On the encouraging side, we are seeing some pickup in later-stage dealmaking from lows hit earlier this year.
  • However, the slowdown at seed is a concern, given that the most impactful and valuable startups all have to start out at this stage. Fewer seed deals means a smaller pool from which future high growth ventures might emerge.
  • The startup world is now five to six quarters into the current funding decline, Crunchbase data shows. Many investors who were prolific during the boom times continue to scale back dramatically. At the same time, we’re not seeing a lot of active contrarians willing to step up their game while others pull back.


  • The broad trendline doesn’t look too bad but masks the inertia at entry levels of startup investor appetite. The busiest post-seed investors are busier, many of them were at least a little more confident in Q3 than they were in Q2.
  • Seed and early-stage funding continued to decline year over year, a clear signal that the venture markets are not opening up yet, but keep an eye out for an increased volume of early conversations as investors get priced out of AI based deals.
  • Despite investor caution AI, cleantech, health and biotech will continue to dominate the landscape in the UK. Early-stage companies with proven cash flows at seed, early and series A stages are likely to continue being a large part of deal volumes for the next six months.

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