Boston startup VC funding drops by 71%

 

Boston-based startups attracted $2.8B in VC funding in Q1 2023, representing a 71% drop over the peak value of $9.8B in Q4 2022, per Business Journal.  Across the top 10 metro areas nationally, only San Jose and Seattle have witnessed higher funding drops in the same period. For comparison, the median drop across the 10 metro areas was 74%.  Investments are expected to fall even further this year, making conditions difficult for startups that raised funding in the peak of 2021 as they will be fast approaching the end of their cash runways in the middle of this year.  Boston-based VC firm Flybridge's general partner Jeff Bussgang said, "This is the new normal, and it's a recalibration back to what it was in 2017, '18, and '19." Nevertheless, Bussgang is optimistic that the region will benefit slightly due to the funding being deployed into AI startups.  Frank Ahimaz, a senior lecturer at Sloan, expects the funding pullback to impact women and minorities the most.