By all accounts, venture funding will continue to be constrained in 2024 unless the IPO market bursts open with a lineup of companies that slowed their exit plans over the past two years.

The subdued funding climate was evident in January. Global startup funding for the first month of the year reached close to $22 billion — slightly below the monthly average for 2023 — according to an analysis of Crunchbase data.

Funding in January was up from December 2023, but that was the weakest month for venture investment last year.

A year-over-year comparison for the month of January shows funding last month fell in large part due to the single largest funding of 2023: Microsoft’s commitment of $10 billion to OpenAI a year earlier.

Late-stage funding in January topped $10 billion, while early stage came in at around $9.4 billion and seed around $2 billion. Early- and late-stage funding were both up month over month with large rounds in energy, delivery, semiconductors, quantum and logistics.

Around $2.1 billion — or 10% — of January’s startup funding went to the AI sector. Large rounds in AI were raised by robotics, customer experience, voice synthesis and AI architecture companies.

Up rounds, down rounds

Despite a funding climate in which many startups have struggled to raise at their previous valuations, a few significant known up rounds were raised, including by fintechs Bilt Rewards and DailyPay, sports entertainment company Minute Media, and AI chip startup Rebellions.

Quora, meanwhile, raised a down round seven years after its previous funding. Andreessen Horowitz led the $75 million round at a valuation of $500 million. The company was valued at $1.8 billion in 2017.

Layoffs continue

Tech sector layoffs continued into January. Public companies including Microsoft, Salesforce 1, PayPal and Unity made further cuts, as did private unicorn companies Brex, Flexport and Discord.

According to the Crunchbase Tech Layoffs Tracker, at least 17,000 U.S. tech workers lost their jobs last month. (But although that’s high, it’s a sliver of the more than 65,000 U.S. tech workers who lost their jobs a year earlier in January 2023.)

What’s next for startup funding?

Many investors expect startup funding to remain subdued this year, though that could change if the IPO market makes a big comeback.

“If the IPO market pops, and all those companies that are waiting in line get out and actually have a strong IPO, I think that could really open things up,” Jenny Lefcourt, a partner with Freestyle Capital, said in a late 2023 interview.

If that happens, she said, investors would be “willing to underwrite more risk because they see the potential for upside, and I think that could change the entire ecosystem.”

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Feb. 12, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

As of January 2023, we have made a change to how we include corporate funding rounds in our reporting. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)