What can we expect from start-up dealmaking in the year 2023?
The start-up industry has grown exponentially over the past few years, with no signs of slowing down. As the industry continues to mature and evolve, it’s important to keep an eye on the trends that will affect start-up dealmaking in the future. In this blog post, we’ll explore what we can expect from start-up dealmaking in the year 2023, including how technology and venture capital funding will shape the deal landscape. We’ll also look at the opportunities available to entrepreneurs and investors, as well as the potential risks involved.
The state of start-up dealmaking
The world of start-up dealmaking is an ever-evolving one, and the year 2023 is expected to be no exception. In the past decade, we’ve seen a rise in venture capital investment into start-ups, with deals and financing rounds of all sizes being completed regularly.
In 2020 alone, venture capitalists poured nearly $140 billion into start-ups worldwide. This trend looks to continue in 2023 as well, with investors seemingly more eager than ever to put money into innovative, promising businesses.
At the same time, however, we’re seeing a shift in the types of deals being made. While smaller investments were popular in the past, there has been a noticeable trend towards larger financing rounds in recent years. This could indicate that investors are looking for larger returns on their investments, or that start-ups themselves are needing more capital to reach their goals.
Moreover, corporate partnerships have become a prominent force in the start-up dealmaking space. Companies like Amazon, Microsoft, and Google have become increasingly involved in the acquisition and investment of smaller tech companies, creating a new dynamic in the industry.
With the continued rise of venture capital investments, the emergence of corporate partnerships, and the promise of innovative new products and services, it’s clear that the state of start-up dealmaking in 2023 will be an exciting one.
The rise of the mega-round
In the past few years, there has been a massive increase in the size of venture capital rounds. This is due to a combination of increased investor confidence, the introduction of more sophisticated investors, and the emergence of several big-name unicorn startups. The rise of the mega-round has been particularly prominent in the US, where companies like Uber, Airbnb, and Stripe have all closed deals worth over $1 billion.
The emergence of unicorns has also been a major factor driving up the size of venture capital rounds. These companies, which were previously unheard of, have become billion-dollar businesses. This success has spurred a new wave of investment from both traditional venture capital firms as well as corporate investors.
While the rise of the mega-round has been great news for some startups, it has also made it difficult for smaller companies to get the same level of investment. As such, it has become increasingly important for startups to differentiate themselves in order to attract the attention of investors. This could be through innovative business models, experienced management teams, or unique technology.
The return of the public markets
The past few years have seen a resurgence in the number of technology companies looking to go public. Despite the high failure rate of companies during the dot-com boom of the late 1990s and early 2000s, companies such as Airbnb, Slack, and Pinterest have made headlines with their successful IPOs. This has been accompanied by a growing appetite for tech investments amongst institutional investors, many of whom had previously been wary of the sector.
This trend is set to continue in 2023, with the market primed for more technology companies to take the plunge and offer shares to the public. This will provide more opportunities for both investors and founders alike. For investors, it offers access to a wide variety of potentially lucrative stocks from fast-growing startups. For founders, it offers a way to turn their hard work into a liquid asset that can be used to fund future projects or reward employees.
It’s also worth noting that the SEC’s new rules on accredited investors will make it easier for smaller investors to get involved in public markets. These rules allow companies to accept investments from non-accredited investors, providing greater access to those without deep pockets or extensive market knowledge.
All of this suggests that 2023 will be an exciting year for both startup dealmaking and the public markets. With more venture capital than ever before, a variety of companies looking to go public, and an expanding pool of investors willing to invest, there has never been a better time for tech companies to go public.
The consolidation of the ecosystem
In the past decade, the start-up ecosystem has seen an unprecedented level of consolidation. Start-up deals are increasingly dominated by a few key players, and the number of acquirers has diminished significantly. In the future, we can expect to see more of this consolidation in the form of increased mergers and acquisitions among start-ups.
The consolidation of the start-up ecosystem is driven by a variety of factors. Consolidation is often used as a way to boost growth and leverage resources, as larger companies can more easily access capital and talent. With fewer players in the market, competition decreases, allowing businesses to capitalize on economies of scale and further differentiate their products and services. Additionally, consolidations help to reduce risk and increase efficiency, allowing businesses to focus on their core competencies.
The death of the unicorns
In recent years, the term “unicorn” has become synonymous with a start-up that has achieved a valuation of $1 billion or more. However, it appears that this trend is coming to an end. The last two years have seen a steep decline in the number of unicorns as many of these high-valuation companies have failed to live up to expectations and their valuations have been slashed. This trend is likely to continue in 2023 as investors become more cautious and begin to focus on tangible metrics rather than relying on hype.
Finally, we must also consider the emergence of alternative funding sources such as ICOs and equity crowdfunding. Although these new sources of capital can be beneficial for start-ups, they can also increase competition within the market. As a result, many unicorn companies may struggle to remain competitive and eventually fall by the wayside.
The start-up dealmaking landscape is constantly shifting and evolving. We can expect to see many changes over the next few years as the industry continues to grow and develop. In 2023, the most important developments are likely to include the rise of mega-rounds, the return of public markets, the consolidation of the ecosystem, and the death of unicorns.