Feed the herd

During the first half of 2023, US venture funding fell 48% Y/Y. This not only impacts new startup launches, but also the outlook for existing firms.  After a multi-year boom in funding, there are now 700 US-based unicorns – venture-backed private companies valued at USD one billion or more. The tighter funding environment has however greatly shortened the operating runway for these typically unprofitable endeavors. According to Morgan Stanley, 18% of US unicorns have less than one year of operating cash on hand, double the level in a typical cycle. For smaller and less established venture backed firms, funding availability is even tighter, and during 3Q23 more than 200 such firms shut down – a figure that is four times greater than in recent years.

 Source: Morgan Stanley, Pitchbook, SVB, Bloomberg, September 2023