KPMG's Venture Pulse Q1 2023 report shows US VC investment fell for a third straight quarter, from $40.75 billion in Q4 2022 to $31.7 billion, less than half of Q1 2022's total, with deal count dropping from a peak of 5,196 in Q1 2022 to just 2,217, driven by geopolitical uncertainty, rising rates, the FTX collapse, tech valuation concerns, and banking sector turbulence. Despite VCs still holding significant dry powder from the 2021-2022 funding boom, investors grew notably cautious, slowing deal speed for added diligence, scrutinizing valuations and profitability more closely, and largely avoiding first-time deals in favor of supporting existing portfolio companies, while unicorns in particular avoided new rounds to dodge down-round valuation cuts and loss of unicorn status, instead negotiating insider bridge deals. Alternative energy and greentech attracted the largest individual rounds of the quarter, including $800 million for Generate Capital and $525 million for Xpansiv, while M&A activity stayed soft and KPMG forecast continued weak VC investment into Q2 2023, with energy, cybersecurity, defense, generative AI, and fintech-as-a-function expected to draw growing investor interest.

Founders at unicorn-valued companies get a genuinely useful, real-time explanation for why so many peers were avoiding new priced rounds during this period, opting for insider bridge deals with concessions instead, since the report ties this specifically to fear of losing unicorn status and accepting a public down-round valuation. Early-stage founders get a specific reassurance buried inside an otherwise bearish report, that early series round median deal sizes remained resilient even as late-stage valuations collapsed from over $800 million to just $250 million, a useful distinction for calibrating expectations by stage rather than assuming the entire market was equally weak. The forward-looking sector calls, energy, cybersecurity, defense, generative AI, and fintech-as-a-function, give investors and founders a dated, checkable prediction from a major accounting and advisory firm, useful for retrospectively assessing how accurately KPMG's Q2 2023 sector forecast actually played out.