The collapse of Silicon Valley Bank, the ensuing credit crunch, and a flight to quality defined the early-2023 venture investing market. How did these events reverberate through the year in terms of built world VC check sizes and how are active investor sentiments changing in 2024?
Early-stage built world check sizes–Seed and Series A–somewhat surprisingly, saw an increase in Q1 before normalizing in the remaining two quarters, but ultimately continuing a positive YoY trend as built world investors continue to show favor towards early stage rounds. Continuing the theme from 2023, investors are signaling comfort on the sidelines of later-stage looking ahead to 2024.
This briefing will address the BuiltWorlds Venture Forum's (BVF) insights on how they are planning to deploy capital this year and how that strategy differs from last.
BVF Insights
Average 2024 Check Size: $1,310,000
Median 2024 Check Size: $500,000
Range of BVF Check Sizes: $100,000 - $4,000,000
2023 BVF Investing
2023 experienced record investment values despite a depressed deal count. The first half of the year was bolstered by early-stage investing, whereas later-stage investing ramped up in the second half of the year. Despite a lower deal count, the industry brought in a record amount of capital compared to previous years.
BVF members participated in 36 deals, which led to approximately $782M (note: some deal values were undisclosed and this is a sum of all deal values that BVF investors participated in) of capital provided for startups in the ecosystem.
2024 Outlook
BVF members are looking ahead to 2024 with clear eyes. 60% of BVF benchmarking survey respondents plan to hold their average check sizes at 2023 levels, while 40% are looking to increase their average investment.
The early stage proclivities of 2023 show no sign of abating in 2024 as capital restraint has flushed out oversubscribed and under-promising startups. Q1 2023 saw an uptick in Seed and Series A deal sizes, before normalizing in Q2, and inching back up again in Q3 and Q4. This is attributed to investors sitting out on later-stage investing early in the year.
Accordingly, most BVF members are looking to participate in the Pre-Seed to Seed space, although there was a resurgence in later-stage investing in the second half of 2023. This was buoyed by restored confidence in AEC tech after surviving startups have had to prove themselves by effectively managing capital for the last year.
As a soft landing becomes increasingly likely and rate cuts are expected to begin in the second half of 2024, valuations should begin to appreciate, investors will become more liberal with their checks.
Conclusion
The BuiltWorlds Venture Forum investors comprise some of the most innovative investors in the space providing a good barometer for the year to come. The BVF’s sentiments heading into a new year reflect optimism and excitement for the sector as overall confidence in AEC tech is continuing to push higher.
Stay tuned for a comprehensive assessment of the 2023 built world venture market as the 2023 Annual Venture Report will be released January 22nd.
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