Should you invest in start-ups now? A practical study of start-ups investment trends using commercial databases

Hiroshi Nozawa and Rihyei Kang

Journal of the International Council for Small Business, 2024, vol. 5, issue 1, 62-71

Abstract: The funding situation for start-ups is influenced by factors such as policy interest rates and the trends of the stock market. However, the impact is not uniform across all growth stages, and it varies depending on the growth stage. As a result, the funding situation may be different for each funding round. This study aims to examine the funding situation of American start-ups since 2017 using a commercial database, analyze each funding round, and clarify the relationship between changes in external conditions and the funding situation for each round. Many reports suggest that the valuation of start-ups is decreasing due to the impact of financial tightening and the Ukrainian crisis, but detailed articles analyzing the situation for each funding round are not readily available. The media, such as the Nikkei, reported that the overall fundraising situation for start-ups is worsening. However, this study found that the impact on the funding situation for start-ups varies depending on the growth stage, and, particularly in the series B round, the investment amount has hardly changed. Based on these results, it is suggested that venture capital funds and companies should continue to invest in start-ups while considering the characteristics of each funding stage, without shrinking their investments.

Date: 2024
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DOI: 10.1080/26437015.2023.2279579

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