After a turbulent start January AND FebruaryU.S. startup funding dropped dramatically in March.
U.S. corporations have raised just about $13 billion in early- and later-stage funding this month, in keeping with Crunchbase data. Unless momentum suddenly picks up, this implies March might be on track to deliver just a fraction of the investment results of either of the previous two months, as shown below.
The slowdown is more pronounced in the late phase
The slowdown is almost entirely resulting from fewer giant AI mega rounds closing this month.
Given this, there is a case to be made against reading too much into the most significant numbers. After all, most of February’s huge total got here from one round – OpenAI‘S record collection of $110 billion — it happened to be announced on the penultimate day of the month.
A few weeks earlier, Anthropic secured A $30 billion in financing. Also in early February, the robotaxi pioneer Waymo raised $16 billion in recent late-stage financing.
By comparison, early-stage and early-stage deals in March are on track to approach the levels of the previous two months, as shown below.
The war in Iran and the nerves of investors in the USA
The March slowdown in startup financing also coincides with the war in Iran, which began on February 28. In the following weeks, broad stock indices fell, although Monday brought a long-awaited partial recovery.
It’s price noting that this month’s funding slowdown is a primarily American phenomenon. In turn, financing for European start-ups reached the highest level of the 12 months in March, which was driven by, among others, mega rounds for the AI infrastructure unicorn Scale and launching artificial intelligence Advanced machine intelligence.
February could also be record-breaking
While there are many potential catalysts that might increase funding in the coming weeks, each economic and geopolitical, February US funding is prone to remain record high.
It’s clear that a $110 billion funding round – something unprecedented in startup history – might be difficult to surpass. If this happens, it’ll likely take years, not weeks or months.
For now, we are going to keep a close eye on the health of later-stage financing through more typical compositions. Thanks to those measures, the March slowdown seems much less dangerous.