New Venture Investor Survey Shows AI Dominance Continues

PitchBook and Web Summit partner on 8th survey

LISBON, Portugal, Nov. 14, 2023 /PRNewswire/ -- PitchBook, the premier data provider for the private and public equity markets, today released findings from a new survey conducted in partnership with Web Summit, the world's largest technology conference which takes place November 13-17, 2023 at Altice Arena in Lisbon, Portugal.

Key Takeaways

• 62.2% said artificial intelligence and machine learning (AI/ML) has the most disruption potential of emerging technologies, an increase from 29% 12 months prior. 30% of investors regularly use AI to assess investment opportunities.
• 63.1% of investors say they would not invest if there would be a negative environmental impact.
• Only 43.2% said they have increased the representation of women within their firm and portfolio companies, while the number of women in senior management positions has also decreased from 75% to 66.7% over the last year.
• Just 28.9% of investors say geopolitical events would affect their investment strategies, a significant decrease from last year's 79%.

The survey was completed by 111 global venture capital (VC) investors attending the conference. This is the 8th survey PitchBook and Web Summit have collaborated on and offers a look into investor sentiment towards emerging technologies, shifts in investment strategy and increasing representation of women in VC. PitchBook is sponsoring the investor lounge at Web Summit, where investors in attendance can work, take meetings and network. 

Globally, venture capital investment activity has slowed with $247.2 billion invested through the end of the third quarter, down from $439.9 billion in the same period of 2022. Exits remain difficult to come back, applying pressure to the dealmaking environment and slow fundraising is in large part due to exit markets returning little in the way of gains back to VCs and LPs.

"Nearly half of the investors surveyed expect it to be more difficult to raise capital from 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," said Kyle Stanford, lead VC analyst at PitchBook. "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."

"It's heartening to see so many firms say that they wouldn't invest if there would be negative environmental impact. We've noticed an increase year on year in sustainability and cleantech focused startups, almost doubling since 2021, and are delighted to see this trend among VCs. However the decrease in firms investing in women led startups is concerning. Countless studies such as those from McKinsey and the American Sociological Review have highlighted the benefits of diversity and inclusion in business. We value this highly, with almost one third of our startups having a woman founder, and 43 percent women attendees, we hope that we can lead by example to help close this gap," said Ricardo Lima, Head of Startups and Investors at Web Summit.

See findings and comparisons with past surveys below:

Emerging technologies

• Investor interest in AI/ML has continued, with 62.2% of respondents indicating AI/ML has the potential to be most disruptive in the next five to ten years. Compared to past conferences, this is on pace with Collision 2023 (64%) where we saw interest skyrocket compared to Web Summit 2022 where only 29% selected AI and ML six months prior. Climate tech (9.9%) and healthtech (8.1%) were in second and third place, respectively.
• When it comes to investing in these AI/ML technologies, 75.8% of investors surveyed have made at least one investment in AI companies in the last eighteen months and 7.2% have made at least six investments in the space. 
• Almost one-third (30%) of investors said they regularly use AI and data analytics when reviewing investment opportunities. Another 36.4% indicated that while they are not currently using AI and data analytics in the investment review process, they plan to integrate both in the review process in the next 1-2 years.

Investment strategies

• Majority of investors say geopolitical events (71.1%) and rising interest rates (72.9%) have little to no impact on their investment strategies. This is a shift from last year's Web Summit, where only 21% of investors said their investment strategies were not impacted by geopolitical events.
• However, 63.1% say environmental impact affects their decision when assessing an investment opportunity and they would not invest if there would be a negative impact.
• For the first year, disruption potential (36%) has taken the top spot for which criterion investors look for when evaluating a technology investment opportunity, followed by executive team pedigree (34.2%). At both Collision 2023 and Web Summit 2022, executive team pedigree were the front runners, at 48% and 31% respectively.
• Looking at the mix of new and follow-on investments in existing funds, 91.8% of investors said at least half of their fund was for new investments, up from 82% at Web Summit a year ago.

Women in VC

• Over half of investors surveyed (58.6%) reported 25% of their investments made in the last 18 months were to women-led startups. This is slightly lower than what was reported at Collision in June (66%), however, the number of investors reporting no investments in female founders has lowered to 26.1% presently compared to 33.3% five months ago. 
• Investors also reported fewer women in senior management positions at their firms, dropping to 66.7% from 75% at Web Summit 2022.
• Nearly three-quarters of investors (71.1%) claim they have increased hiring or are actively exploring ways to increase representation of women and marginalized communities at the firm-level and within portfolio companies, while 20.7% report it is not an area of focus at this time. However, only 43.2% of investors said they have increased the representation of women within their firm and portfolio companies

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About PitchBook
PitchBook is a financial data and software company that provides transparency into the capital markets to help professionals discover and execute opportunities with confidence and efficiency. PitchBook collects and analyzes detailed data on the entire venture capital, private equity and M&A landscape?including public and private companies, investors, funds, investments, exits and people. The company's data and analysis are available through the PitchBook Platform, industry news and in-depth reports. Founded in 2007, PitchBook operates globally with more than 3,000 employees. Its platform, data and research serve nearly 100,000 professionals around the world. In 2016, Morningstar acquired PitchBook, which now operates as an independent subsidiary.

About Web Summit
In the words of Inc. Magazine, "Web Summit is the largest technology conference in the world". Forbes says Web Summit is "the best tech conference on the planet", Bloomberg calls it "Davos for geeks", Politico "the Olympics of tech", and the Guardian "Glastonbury for geeks".

SOURCE PitchBook