Venture capitalists show renewed interest in startups, marking positive shift in late 2023

A new report released today by DocSend Inc., a Dropbox Inc. company, finds a surprising positive shift in fundraising dynamics in the fourth quarter of 2023, noting investor engagement with pitch decks increasing for the first time in six quarters.

Investor activity increased 1.7% quarter-over-quarter in the fourth quarter, signaling what the report describes as “encouraging progress” into 2024. Investors were found to have reviewed more pitch decks — presentations by entrepreneurs seeking investment — as uncertainty and economic concern subsided and momentum grew to invest in disruptive industries, such as artificial intelligence. However, wannabe founders were also less active in sending pitch decks to investors in the quarter, with activity dropping almost 6% quarter-over-quarter.

Comparing the numbers year-over-year also gives hope, with both pitch deck interactions and founder links created increasing by 6.7% and 4.2%, respectively, from the fourth quarter of 2022. While the increase in pitch deck engagement is a positive one, over the full-year 2023, interactions dropped 4.8% from 2022.

As noted by PitchBook-NVCA Venture Monitor on Jan. 4, overall venture capital funding plummeted by 38% in 2023, but the DocSend report argues that the 6.7% year-over-year rise in interactions shows investors are increasingly interested in new opportunities to allocate capital, signaling a potential increase in dealmaking in early 2024.

“Investors hesitated to make deals in 2023 due to a series of macroeconomic factors, but our data provides a glimpse into future investment flows by looking at current deal interest,” explained Justin Izzo, lead data and trends analyst at Dropbox DocSend. “After the last 15 to 18 months of considerable stress on the market, venture capital seems to be approaching a period of increased confidence. [The fourth quarter] has shown investor re-engagement and VCs are potentially ready to make up for the deals they opted out of earlier in the year.”

Izzo added that “the small increase in [quarter-over-quarter] investor activity signals that investors may be more engaged during the post-holiday January rush, finally at ease after a series of jarring interest rate hikes and increased inflation.”

DocSend, once itself a startup, has been part of Dropbox Inc. since being acquired for $165 million in March 2021.

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