VC investment has been slowing since 2022, but Q2 of 2023 appears to have slowed down due to a rebound in the generative AI boom. However, without the two large deals in Q1, Q1 would actually have turned upward. Both investment amounts and number of deals have returned to pre-COVID levels in Q2 of 2020, restoring the situation to that of exactly three years ago.
When broken down by stage, the slowdown in later-stage deals, which tend to be large deals with short-term payback, had a major impact overall. The strength of traditional VCs is the long-term early-stage deals, with the levels for Q2 and Q1 of 2023 being roughly the same, so investment is not slowing down, and financing is being conducted without being greatly affected by economic conditions.
In Q1 2023, generative AI attracted attention, with OpenAI closing a major deal, but there was a slight change in Q2, with investment in applied areas expanding rather than generative AI losing steam. As the introduction of generative AI is being considered and promoted in all industries, startups are emerging that are offering industry-specific generative AI platforms targeting such companies.
During the COVID-19 pandemic, startups promoting business model innovations (dark stores, D2C, etc.) attracted investment, but now technology startups (AI, robotics, etc.) are increasingly attracting investment. Business models with low barriers to entry rely on speed of launch and gaining industry share as success factors, but technology startups have strengths that cannot be easily imitated by other companies, such as proprietary technology and patents.
Shrinking wallets (VC funds) are open to startups with core competence in technology.
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