A significant 62.2% of 111 global venture capital investors polled by Pitchbook this week believe artificial intelligence and machine learning (AI/ML) have the most disruption potential among emerging technologies, a substantial increase from the 29% reported 12 months prior.
Pitchbook, a data provider for private and public equity markets, conducted the survey at Web Summit, an annual international technology conference in Lisbon. The poll found that 30% of investors now regularly use AI to evaluate investment opportunities.
Additionally, Pitchbook reported that environmental considerations are increasingly influencing investment decisions, with 63.1% of investors stating they would avoid investments that could lead to negative environmental impacts. This shift underscores a rising trend towards environmental consciousness in the venture capital sector.
The survey also highlighted a concerning trend in gender diversity within firms. Only 43.2% of respondents reported an increase in the representation of women in their firms and portfolio companies. More alarmingly, the percentage of women in senior management positions has declined from 75% to 66.7% over the past year.
Geopolitical events seem to be having a diminishing effect on investment strategies. Only 28.9% of investors consider geopolitical events as influential on their investment decisions, a significant decrease from last year’s 79%. Globally, venture capital investment activity has slowed down, with $247.2bn invested by the end of the third quarter of 2023, a decline from $439.9bn in the same period in 2022. This reduction in investment is attributed to challenging exit markets and the resultant pressure on dealmaking and fundraising activities, stated Kyle Stanford, lead VC analyst at Pitchbook.
Stanford noted that “nearly half of the investors surveyed expect it to be more difficult to raise capital from limited partners (LPs) in the next 12 months, which aligns with what we’re seeing in the data as fundraising conditions have become more challenging considering the record amounts raised in recent years.” He added, “we expect the low fundraising totals from this year to impact VC activity in 2024, even as many investors point to next year as a rebound year for the market.”
Ricardo Lima, head of startups and investors at Web Summit, expressed satisfaction over the growing refusal to invest in ventures with negative environmental impacts. He noted a year-on-year increase in sustainability and cleantech-focused startups, nearly doubling since 2021. However, Lima expressed concern over the decrease in investment in women-led startups. He emphasised that “countless studies such as those from McKinsey and the American Sociological Review have highlighted the benefits of diversity and inclusion in business.” Lima pointed out that nearly one-third of startups at Web Summit had a woman founder and that women constituted 43% of the attendees.
Web Summit is taking place at Altice Arena in Lisbon from 13 to 17 November 2023.
