State of venture markets in 2023

— Excerpt from Stoic VC Year in Review

Biotech was a constant in 2023.

There were a few narratives that dominated markets in 2023, none more so than the reversion to the ‘new normal’ (that might not actually be that new). There’s a good argument that the decade leading into 2022 was actually the aberration and what we’re seeing now is business-as-usual. For deep tech (DT), it’s easy to be distracted by the GLP-1 and AI hype cycles that prevailed this year. But 2023 was largely encouraging, even if hurdle rates were adjusted across the board. My high level observations below.

TL;DR

1. The ‘departure’ caused more economic damage than we thought but likely to be less pronounced for DT. The nature of development and enormous capital requirements, makes it difficult for markets to differentiate hype from real. The constant demand for these companies tends to provide added insulation against economic cycles. We do however expect the DT “zombies” to go under in the next couple quarters, but this will be a much needed market clearing mechanism.
2. 2023 may have been a great vintage for DT venture capital, but investors were hesitant. With loss of public market metrics and 2022 seared in their minds, investors were more selective than ever. Regardless, good opportunities continued to be financed.
3. Life sciences unrattled by…