Following the dealmaking peaks of 2021, venture capital has been struggling to reverse a downward trend. This rang especially true in 2023 when global venture capital investment totaled $312.3 billion, down 36% year-over-year and 54% compared to 2021.
Affinity platform data on more than 3,000 firms in 80 countries affirms this slowdown—with median deal volume for our users steadily declining throughout 2023. But it’s not all bad news.
In our 2024 investment benchmark report, we analyzed key dealmaking activities of all our VC firm customers versus those ranked top by Dealroom’s VC Investor Ranking. The goal: to establish benchmarks of success. Read on for the three main takeaways—or view the report for a deeper analysis.
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1. Top VCs provide consistent engagement
Throughout 2023, all firms showed inconsistent engagement with their network contacts—they were historically quiet mid-year, sending and receiving 42% fewer emails year-over-year in Q2 2023. But by the end of the year, all firms increased their engagement, sending and receiving similar levels of emails as the start of the year.
In contrast, top firms consistently generated more and more engagement throughout the year, to end Q4 with 30% more emails sent and received compared to all firms.
While top firms worked on more deals than all firms, there’s another driver for the difference in engagement. As deal flow slowed mid-year, top dealmakers likely increased their focus on supporting their portfolio companies (a priority for 48% of firms) and strengthening their existing relationships.
View the report to learn what firms’ activity levels look like so far in 2024 and what we expect for the rest of the year.
2. Investing in existing connections pays off
Interestingly, network growth wasn’t a priority for all firms or top firms in 2023. All firms showed inconsistent network growth with large dips mid-year, adding 33% fewer contacts to their networks in Q2. This growth rebounded by the end of the year, as many firms were trying to source new contacts and deals after a slow year.
Top firms followed a similar trend, but their network growth didn’t fully normalize by the end of the year—instead they saw a 31% drop in new contacts compared to Q1.
For top firms, engagement increased but network growth fell. This suggests that top firms were focused on strengthening their existing connections—supporting their portfolio companies, nurturing existing LP relationships, or using their existing network for deal sourcing—rather than finding new contacts last year.
Research from our 2024 private capital investment predictions report reveals why top dealmakers focus on their existing connections—33% of investors expect more than half of their deals to come from their existing network.
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3. Deal volume was concentrated with top VCs
The median number of deals added to Affinity for all firms steadily decreased throughout 2023. However, for top firms, deal flow decreased throughout the first three quarters of the year, but spiked at the end of the year with top firms adding 69% more deals quarter-over-quarter in Q4.
For top firms, the consistent increase in engagement and focus on existing contacts appeared to pay off, culminating in a deal surge in Q4.
To see how deal volume is shaping up so far this year, view the report.
How your firm can become more like a top VC
The top firms are ahead because of a unique combination: well-maintained networks powered by underlying relationship intelligence technology that helps them monitor and nurture these relationships.
Learn more about how relationship intelligence can help you find, evaluate, and close deals and other key strategies of top firms. Get your copy of Affinity’s 2024 investment benchmark report to find out:
- Benchmarks to contextualize your firm’s performance
- The factors that set top firms apart
- What you can do to rise up the rankings
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