Corporate venture capital-backed deals and dollars fall to multi-year lows as CVCs shield themselves from the volatile tech market, according to a report from CBInsights.
CBInsights noted in its latest update that the corporate venture capital (CVC) market has constricted “amid corporate belt-tightening and subdued returns from startup exits. In 2023, deals from CVCs fell to 3,545 — the lowest level since 2019 — marking a 32% drop YoY.”
At the same time, fewer new Corporate VCs “are emerging: just 162 CVCs were founded in 2023 — a 6-year low.”
Based on CBInsight‘s deep dive below, here is are some of the key takeaways from the state of corporate venture:
- CVC activity is down significantly from 2021’s highs, with CVC-backed dollars and deals sinking to $55.1B across 3,545 deals in 2023. The decline in funding with CVC participation has been especially pronounced, while dealmaking, despite falling 32% YoY, remains above where it was in 2019.
- The US has been hit especially hard by the CVC retreat: Deal volume fell 25% QoQ to 233, a 6-year low, in Q4’23. This drove the US’ share of CVC deals down to just 29% among global regions — the lowest point in over a decade.
- A majority of the most active CVCs are based in Japan. The top 3 dealmakers in Q4’23 were all venture arms of Japanese financial services incumbents: Mitsubishi UFJ Capital (22 companies backed), SMBC Venture Capital (18), and Mizuho Capital (15).
- A generative AI company took the top CVC-backed deal in Q4’23. Aleph Alpha, a Germany-based LLM developer, raised a $500M round from investors including the venture arms of Bosch and Hubert Burda Media.
- Early-stage deal share has remained at an all-time high of 63% for 2 years running. CVCs are showing sustained interest in the earliest stages of startups, where they can form deep, long-term partnerships (and hopefully see greater financial returns in the long run).
As reported late last month, Global Insurtech funding and deals slide to 6-year lows in 2023, according to an update shared by CBInsights.
Insurtech startups had a “brutal” 2023, with funding and deals reaching 6-year lows — in line with the broader venture slowdown, the team at CBInsights noted.
Nevertheless, early-stage insurtechs have “shown some resilience, with the median early-stage deal size holding steady in 2023 vs. 2022.”