This webinar features Samantha Santaniello, Head of Business Development & Partnerships at MassMutual Ventures, and Dan Polonka, Senior Product Marketing Manager at Affinity.
The discussion focuses on key findings from Affinity's 2023 investment benchmark report: Global unicorn edition, factors that differentiate top venture capital firms, and strategies from MassMutual Ventures to get ahead.
The state of unicorns in 2023
While 2021 saw a surge in venture capital activity and an increase in the number of newly-minted unicorns, 2022 marked a shift to more risk-averse investing. Investors changed their focus to companies with strong fundamentals and clearer paths to profitability as opposed to having a 'growth at all costs' mentality.
Looking at the number of new unicorns globally in 2022, levels were broadly aligned with historical averages except in a few key markets. For example, the number of new unicorns in China lagged in 2022 while India emerged as a promising investment market with significant growth since 2020.
When it comes to key hubs for unicorns, the U.S. remains the dominant unicorn market—especially in San Francisco, New York City, and the emerging hub of Austin. Outside of the U.S., London in the U.K. is a key location for promising startup growth.
Strategies of top venture capital firms
Data from our investment benchmark report reveals several key strategies of leading venture capital firms, particularly around the way they manage their professional networks.
Firstly, our data shows that while top venture capital firms have larger professional networks, they added 13% fewer new contacts to their networks in 2022 compared to other firms. This suggests that top firms actually rely on their existing networks to source more deals, using relationship intelligence to understand and get more from the people they already know.
Top venture capital firms also had higher activity levels throughout the year—booking more meetings and sending more emails than other firms. These findings reinforce the importance of nurturing firms' existing networks.
Santaniello notes the importance of using referrals to source deals, along with using robust technology that automates dealmaking workflows so that firms are able to allot more time to diligence and supporting their portfolio companies.
2023-2024 outlook
Looking ahead, Santaniello anticipates venture capital firms will remain selective, while startups become more accustomed to realistic valuations. She expects valuations will normalize as deal activity improves and exits increase.
She also notes the venture capital cycle is maturing with more austerity on funding rounds and expects a continued emphasis from venture capital firms on due diligence, longer deal cycles, and heightened scrutiny of deals to ensures alignment with investors' objectives and market realities.
To gain the full insights, check out our 2023 investment benchmark report: Global unicorn edition.
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