Three insights from Q3 Carta Data

Carta has just released their Q3 2023 State of Private Markets report, which is full of interesting data for those trying to read the tea leaves on where VC markets are heading. I love Carta data because (1) most startups use them to keep track of their cap table, so they have a ton of real data and (2) they are super open with sharing aggregated data with regular folks like me and you. Here are my top 3 take-aways from their Q3 Data:

#1. No massive surprises this quarter, either good or bad

On the good news front, median pre-money valuations for primary rounds continued their recent (gentle) upwards trend. And round sizes have not changed meaningfully from Q2.

On the less good news front, down rounds remain above 18% of all rounds raised for the third straight quarter, and bridge rounds still remain more common than in recent years for all rounds.

#2. Q3 was the slowest quarter for venture fundraising activity on Carta since Q1 2018.

Carta does caveat that Q3 numbers for deal count and capital raised will likely increase in the weeks to come as companies continue to report transactions from the quarter, but for now it looks like the 2-year downward trend is continuing and has now dropped even below 2018 levels.

#3. Onerous deal terms were much less common in Q3

Ending things on a high note, Q3 saw a large reversal in the recent trend around terms that are particularly investor friendly. The percentage of investors getting above a non-standard liquidation preference (above 1x) has dropped back down to less than 2% of all deals from nearly 8% in Q1 2023. The rate of deals involving cumulative dividends and the rate of deals involving participation also fell to their lowest points in the recent quarters.