VC funding globally declined 53% year-over-year in Q1 2023, according to data released today by Crunchbase.

The way those figures break down is somewhat jarring. In Q1 2022, global VC funding shook out to $162 billion, but by Q1 2023 that number was $76 billion. This massive decline is bolstered by both Microsoft's (MSFT) $10 billion investment in ChatGPT-developer OpenAI and Stripe's $6.5 billion round. Without those big numbers, the figures on global VC funding would have been even lower.

"We have likely not yet hit the bottom of this down cycle yet," Crunchbase Senior Data Editor Gené Teare told Yahoo Finance. "If the two largest fundings in OpenAI ($10B) and Stripe ($6.5B) were removed from this past quarter, funding would have been down more than 20% quarter over quarter and more than 60% year over year."

The reality is that the fundraising environment is still in massive flux and has see-sawed radically in the last two years, according to Teare. Silicon Valley Bank's recent collapse was an added hit to companies attempting to fundraise in an already tricky macroeconomic environment.

"2021 was a record funding year," said Teare. "The funding climate shifted dramatically in 2022 as interest rates rose, the values of public technology stocks fell, the war in Ukraine created further instability, the IPO pipeline stalled, and valuations of private companies dropped. In Q1, this was all exacerbated by the collapse of SVB — a further setback in an already weakened funding environment. Companies are having to shore up their cash and delay fundraising. In this environment, investors are more cautious about new investments."

Seed stage companies in the crosshairs

The downfall of SVB slammed early-stage startups, as the bank had 20,000 startup depositors reporting revenues of $5 million or less. So, some of those early-stage woes are showing up in this data, too. In Q1 of this year, even funding for seed stage startups – which can sometimes be more resilient in tough times since the checks are smaller and the world of possible investors is wider – suffered a major year-over-year funding decline of 44%, coming out to $6.9 billion globally, as shown by Crunchbase's data.

"The decline at seed stage is notable," said Teare. "[It's] a signal that even at the earliest funding stages, investors are pulling back. That’s significant because seed funding was by far the least-impacted funding stage through the 2022 reset."

There is, perhaps, some good news – the capital is definitely out there. At the end of 2022, private investors were around $580 billion as of the end of 2022, according to an estimate by Lightspeed Venture Partners's James Ephrati and published by Crunchbase.

So, the question here isn't, "Where's the money?" The question instead is, "When does it get deployed?"

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.

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