ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø

VC investment in the US fell to its lowest level since Q4 2019 as many investors continued to shy away from making large deals. A $997 million raise by lithium-ion battery recycling company Redwood Materials accounted for the largest deal of the quarter, followed distantly by a $500 million raise by AI company Databricks, a $460 million raise by Battery recycler Ascend Elements, and a $460 million raises by Axiom Space.

IPO window opens a fraction; companies working to prepare

The IPO window in the US has been firmly closed for well over a year. In the latter half of Q3â€�23, the window opened a fraction as UK-based AI chip design firm Arm and US-based grocery delivery company Instacart conducted IPOs on the Nasdaq, while US-based marketing automation firm Klaviyo listed on the NYSE. All three IPOs were reasonably successful. Arm raised over $4.8 billion in the largest IPO of the year, with its shares rising more than 25% on the first day of trading;^{1 2} Instacart raised $660 million, with its shares closing over 12% higher;³ and Klaviyo raised $576 million, with its shares closing 9% ahead.⁴

As of the end of Q3�23, the post IPO performance of all three companies has been mixed, although their ongoing performance is something that will need to be watched heading into Q4�23 and Q1�24. While Q4�23 may bring additional IPOs, it’s more likely that any complete opening of the IPO market will not be until 2024. A number of mature startups in the US and their investors, however, are looking at the IPO market with cautious optimism, and are working to ensure they will be ready to take advantage should IPO market conditions improve.

VC firms taking a stronger hand with their portfolio companies

Given the challenging market conditions and economic environment over the last few quarters, many VC investors in the US have been slow making deals, choosing instead to focus more of their attention on their current portfolio companies. This continued to be the case in Q3�23, with a growing number of general partners spending significant time on the ground with their portfolio companies in order to provide more concrete guidance on improving different aspects of their business, from business and operational strategies to marketing approaches and product and technical roadmaps. These activities have focused primarily on startups where VCs have deployed a significant amount of capital, or on highly promising startups in an effort to help them evolve to a point where they can begin to demonstrate a path to profitability.