This text initially appeared on Enterprise Insider.
Startups are having a fairly darkish yr.
Simply over $27 billion in enterprise funding was raised by 3,200 startups that failed in 2023, The New York Occasions reported, citing knowledge from startup tracker PitchBook.
That is near the quantity startups raised in enterprise capital within the third quarter of 2023 ($29.8 billion), based on accounting agency EY.
Nonetheless, the $27.2 billion determine in all probability doesn’t symbolize the true extent of the money burn, as many corporations will fail with out a lot fanfare. And notably, the quantity doesn’t embody giant losses from public corporations or these which were acquired.
For instance, coworking firm WeWork raised greater than $11 billion earlier than its IPO and filed for chapter in November. And school monetary assist startup Frank was acquired by JPMorgan in 2021 for $175 million, earlier than it was shut down in January over fraudulent buyer knowledge.
It has seen a string of main launch failures this yr. Pizza startup Zume, which raised almost $500 million, shut down in June after struggling to get its pizza automation expertise to work.
Convoy, the freight startup that was as soon as hailed because the “Uber for transportation” and raised greater than $1 billion, shut down in November.
This yr’s startup woes led Tom Lover, normal associate at funding agency IVP, to name it a “mass extinction occasion” for startups.
These woes stem partially from declining funding. There was a drought in VC funding in comparison with 2022, with $104.5 billion raised within the first 9 months of this yr in comparison with $183.9 billion in the identical interval final yr, based on EY.