Global corporate venture capital-backed funding and deals drop to the lowest levels since 2018, according to an update from CBInsights.
Quarterly corporate venture capital (CVC)-backed funding “has fallen 73% from its all-time high ($48.6B) just 2 years ago,” the CBInsights report revealed. In that same period, CVC dealmaking has “halved as corporations across the globe focus on cutting costs.”
Even so, CVCs continue “to make strategic investments — if just more selective.” The 2 largest CVC-backed deals in Q3’23 “raised nearly $1B in combined funding.”
Using CB Insights data, the tema highlights key takeaways from our State of CVC Q3’23 Report, including:
- Global corporate venture capital-backed funding and deals drop to the lowest levels since 2018.
- CVC-backed retail tech funding ticks up quarter-over-quarter (QoQ) for the first time since Q1’22.
- Median late-stage CVC-backed deal size plummets 41% in 2023 YTD.
$100M+ mega-rounds account for 41% of deals with CVC participation, a 5-quarter high.
- The US leads in CVC-backed funding in Q3’23, while Asia leads in deal count.
The report from CBInsights added that CVC-backed funding and deals “reached the lowest levels since 2018 in Q3’23.”
The report also mentioned that global CVC-backed funding “dropped 10% QoQ, from $14.8B in Q2’23 to $13.3B in Q3’23.” The drop ran counter “to broader venture funding, which increased by 11% QoQ in Q3’23.”
Deals with CVC participation “fell by 16% QoQ, from 913 in Q2’23 to 764 in Q3’23.”
The broader venture market saw “an 11% decline in deal count over the same period.”
These drops coincided with “a broader decline in the number of active CVC investors between the first 3 quarters of 2022 and the same period in 2023.”
The report further noted that Mitsubishi UFJ Capital and SMBC Venture Capital “were the top CVC investors in Q3’23 by company count (16 and 12, respectively).”
As covered, tech M&A deal volume dropped to its lowest level since 2020, according to a report from CBInsights.
The CBInsights report also reveals that risk-off strategic acquirers are the primary drivers of “a slowdown in tech M&A activity.”
The report further notes that financial sponsors “with heaps of dry powder remain active, but not exuberantly so.” CBInsights also mentioned that “a dearth of high-quality assets, more expensive debt, and macro uncertainty have them also proceeding cautiously.”
$700,000 per employee
The report added that “the median valuation per employee rises ~$120K QoQ in Q2.”
Notably, buyers paid “more per employee in Q2’23 than in the previous quarter.” However, valuation per employee levels “remain depressed from 2021 highs, reflecting today’s more conservative and sober buying environment.”