US startup funding drops 30% in 2023 despite AI frenzy

FILE PHOTO: ChatGPT logo and AI Artificial Intelligence words are seen in this illustration taken, May 4, 2023. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) - U.S. investors injected $170.6 billion into startups in 2023, a decrease of nearly 30% from the $242.2 billion recorded in 2022, as the venture capital funding market continues to grapple with valuation resets amid rising interest rates, according to PitchBook data released on Thursday.

The latest data, from a year in which megadeals in artificial intelligence captured the imagination of investors, shows a persistent decline from the peak of U.S. venture funding in 2021 when startups raised $348 billion.