Global corporate venture capital activity continues to slow in Q1'23, with funding dropping 12% QoQ.
Global corporate venture capital (CVC)-backed funding and deals continued on their declines in Q1’23. However, median early-stage deal size hit a record high, and $100M+ mega-round funding jumped by 28% quarter-over-quarter (QoQ).
Using CB Insights data, we highlight some of the key takeaways from our Q1’23 State of CVC Report, including:
- Global CVC-backed funding reaches a 5-year low, deals fall 44% year-over-year (YoY) from record high.
- Average deal size falls to $21.1M in 2023 YTD, lowest since 2016.
- Median early-stage CVC-backed deal size ticks up to record high.
- $100M+ mega-round funding sees QoQ increase for the first time since Q3’21.
- The US sees the majority of late-stage CVC-backed deals in Q1’23.
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Let’s dive in.
Global CVC-backed funding fell 12% QoQ, from $14.5B in Q4’22 to $12.8B in Q1’23. This marked the lowest quarterly funding level since Q1’18, which saw $11.8B. The decline in CVC-backed funding aligned with the broader drop in global venture funding, which fell 13% QoQ.
Deals with CVC participation dropped 22% QoQ, dipping below 1,000 for the first time since 2021. Global CVC-backed deal count was also down 44% YoY, from a record high of 1,496 in Q1’22.
Average CVC-backed deal size came in at $21.1M in 2023 YTD, down from $26.8M in full-year 2022. This represents the lowest average deal size since 2016, when it stood at $19.1M.
Nevertheless, the broader venture funding environment saw a greater percentage drop (-25%) in average deal size than CVC.
Median CVC-backed deal size also dropped, falling from $10M in 2022 to $8.8M in 2023 YTD. In line with this trend, median late-stage CVC-backed deal size fell from $87M to $50M over the same period.
Despite the drop in median CVC-backed deal size, the median early-stage CVC-backed deal size ticked up to a record high of $6M in 2023 YTD. This was the only deal stage to see an increase in median deal size from full-year 2022 to 2023 YTD.
Notably, median early-stage CVC-backed deal size managed to increase while the median deal size of early-stage deals in the broader venture arena decreased by 8%. CVC-backed deals also continued to command larger median deal sizes than venture deals overall in 2023 YTD.
In comparison to venture deals more broadly, median CVC-backed deal size was up:
- 2.7x for early-stage deals
- 1.3x for mid-stage deals
- 3.3x for late-stage deals
CVC-backed mega-round funding and deals rose for the first time since Q3’21, increasing 28% and 8% QoQ, respectively. Mega-round funding’s share of total CVC-backed funding also climbed, jumping 11 percentage points QoQ to reach 36% in Q1’23.
Total global venture mega-round funding, on the other hand, fell 8% to reach a 6-year low in Q1’23.
Mega-round activity was particularly strong across CVC-backed Series B and C deals in Q1’23. The top 10 CVC-backed Series B deals in Q1’23 were mega-rounds, as were 7 of the top 10 Series C deals.
US-based companies saw $7.6B in CVC-backed funding in Q1’23, equivalent to 59% of all global funding. While US CVC-backed funding remained flat QoQ, the region’s share of global deals increased by 2 percentage points.
The US’ share of late-stage CVC-backed deals experienced an even greater jump, climbing 13 percentage points QoQ. Startups based in the country secured 6 of the top 10 Series D deals and all of the top 10 Series E+ deals.
Additionally, US-based companies accounted for the top 3 CVC-backed equity deals overall in Q1’23. Notably, these deals were all mid-stage deals:
- Monogram Health – $375M Series C
- Adept – $350M Series B
- Our Next Energy – $300M Series B
