Q3 Venture Review & Outlook: The Next Decade of Global Technology

We kicked off the last quarter of 2023 with two significant events for 500 Global – our annual meeting (AGM) and our inaugural UpNext Summit.

This year’s AGM was hosted at the Inter-American Development Bank (IDB) HQ. The agenda featured several of 500 Global’s managing partners and investment partners, portfolio company CEOs, and LPs sharing their perspectives on the state of venture capital and outlook, the future of AI, climate tech, enterprise SaaS, digital health, decentralized finance, and education. We also heard about the latest developments and opportunities in markets such as Latin America, MENA, and Southeast Asia. We are thankful to IDB for their support of 500 Global and hosting this year’s AGM, as well as the CEOs of Springboard, Innovaccer, and Dinari for joining us for their respective fireside chats. 

Following the AGM, we hosted our inaugural UpNext Summit, where we convened more than 100 investors, asset allocators, innovators, and policymakers to discuss a shared future for technology and innovation and how together, we can more actively design strategies and policies that ignite social and economic value. Given the intersection of tech, venture capital, and policy that was the theme of UpNext’s global dialogue, we chose Washington D.C. as the setting for both of these events. Among our distinguished set of speakers were Chris Yeh of Blitzscaling Ventures, Bobby Franklin of NVCA, Bruce Andrews of Intel, Shu Nyatta of Bicycle Capital, Alifia Doriwala of RockCreek, Chris Schroeder of Next Billion Ventures, Kola Owodunni of the Nigeria Sovereign Investment Authority, Rashmi Gopinath of B Capital, and L. Felice Gorordo of The World Bank.

It was at UpNext where we also unveiled the 500 Global Rise Report. 

The Next Decade of Tech
The 500 Global Rise Report was released on October 5, 2023, and offers insights into some of our research. The report organizes and analyzes various datasets designed to quantify the economic growth, technology sector maturity, technology adoption, and venture capital penetration of what we call the “Rise Economies,” among other topics. The report sheds light on four narratives on the next decade of global technology:

• The Rise of the Next Internet Users
• The Rise of the Next Global Companies
• The Rise of the Next Economies
• The Rise of the Next Sectors 

With the Rise Report, we hope to further the conversation among entrepreneurs, the venture community, operators, academics, and policymakers around uplifting people and economies around the world through entrepreneurship.

You can find the report in its entirety along with other commentary and information here: https://500.co/risereport.

In addition to the recap on this month’s events, I’d like to share some thoughts on what we are seeing in the venture funding market since last quarter’s letter, as well as what we’re looking forward to. 

Venture Funding Insights
Venture funding may be leveling off in some aspects with funding amounts increasing 11% QoQ despite an 11% decline in the number of investments. AI, electric mobility and sustainable manufacturing have attracted some outsized new deals during Q3.  We believe that many companies are re-aligning their valuation expectations with the market realities and investors will see those opportunities in the coming quarters. 

Of note related to the strength of the US as well as global opportunities, the same CB Insights report noted that the US represented 50% of all funding with the other 50% coming from other regions. This is an indication that investors are looking for alpha outside the US and these regions are on the rise. For example, funding to startups in Asia in the third quarter of 2023 saw only a slight 8% drop YoY, but represented an 8% increase from the previous quarter, suggesting that the market may be starting to stabilize.

We continue to see exciting opportunities in the US, with many coming through our Global Accelerator Program which recently held its Fall Demo Day. The companies that presented are building exciting products in GenAI, Digital Health, Gaming, Fintech, Sustainable Technologies, Cybersecurity, AgTech, CPaaS, and Productivity. We are especially proud of the fact that 40% of those companies have at least one female founder. 

In alignment with seeking and generating alpha on a global level, Southeast Asia continues to be a key region for 500 Global. We recently announced the final close of $143M in capital across early-stage and growth vehicles for the region. Our journey in Southeast Asia began in 2012, and after 11 years, we’re recognized as a leading technology investor in the region having backed more than 340 startups and invested early in companies now valued at over US$1 billion such as Grab, Bukalapak, CARSOME, Carousell Group, FinAccel, Sky Mavis, and eFishery.

500 Global Managing Partner Vishal Harnal spoke exclusively to Bloomberg about this news and what it means for us, the market, and founders in Southeast Asia. You can read the article here.

What’s Ahead
Despite ongoing challenges in the macroeconomic climate, we remain optimistic as investors. There is no shortage of problems to be solved from digitizing rural geographies and sectors to healthcare and climate issues. Even with the AI revolution creating new solutions to existing challenges, new problems are being created – the need for faster or cheaper infrastructure, prototyping, and debugging models, or creating guardrails to limit hallucinations associated with generative AI. 

I am excited about the future of technology and the role that 500 Global and our partners will play in investing in the next generation of founders around the world. 

Thank you,
Christine Tsai
CEO and Founding Partner, 500 Global