Global funding almost reached $22 billion in May 2023, up a bit month over month and significantly down, around 44%, compared to May 2022, Crunchbase data shows.

The funding setback has impacted all three funding stages — seed, early- and late-stage venture — with each stage down between 41% and 48% in a year-over-year comparison. And despite large funding rounds for AI startups in May, investor interest in the technology wasn’t strong enough to change the overall picture.

For new unicorns in May we count 10 companies — double the count in April, but much lower than the 34 new unicorns that joined the board in May 2022. This is the first month since November 2022 for new unicorns to reach low double digits.

This scaled-back funding environment shows a massive decline from 2021 and the first half of 2022. Current monthly funding is in line with amounts seen in the years 2018 to 2020 — which were up from prior years.

E-commerce play

However, billion-dollar fundings are still taking place in 2023. The largest funding this past month went to Singapore-headquartered fast-fashion retailer , albeit at a lowered valuation. The company raised $2 billion at a valuation of $66 billion, slashing a third of its value from its 2021 funding when it was valued at $100 billion. It reported $22.7 billion in revenue in 2022 and remained the fourth most highly valued private company on The Crunchbase ������Ƶ with , owner of , the most highly valued private company.

AI leverage

One ameliorating trend is investments into AI companies. Out of 38 new unicorns in 2023, AI companies represent eight new unicorns, including two from this past month. Toronto-based is a competitor, building large language models that companies can integrate to build products. is a New York-based generative AI video automation platform.

Other AI companies that raised large rounds in May 2023 include , , and .

However, the interest in funding AI companies is not enough to shift the overall macro funding climate. Around 13% of total funding in May went to companies tagged with AI.

Market turns

The leading AI chip provider, , tipped close to the trillion-dollar value mark for the first time in May 2023, more than 20 years after it went public at $676 million in 1999.

and have also seen their stocks rise, in line with peak values, in the past month. The other trillion-dollar valued behemoths and are down from 2021 peaks.

So, are we in a bubble or downturn? This question was posed by Crunchbase News reporter Joanna Glasner. The 2000 dot-com bust wiped out the asset class, and it took 15 years for to recover from the bubble. After the 2008-2009 financial crisis, the value of tech stocks powered back within two years from the downturn.

In 2021, tech stocks spiked up sharply, a pandemic-driven increase with cloud services leading the way, and many tech companies saw unprecedented growth and garnered large valuations.

The following year, of course, saw a dramatic pullback in funding to tech startups. But despite the recent Nasdaq upswing, May funding numbers indicate that the reset is looking more protracted as investors proceed with caution.

Methodology

Funding rounds included in this report are seed, angel, venture, corporate-venture and private-equity rounds in venture-backed companies. This reflects data in Crunchbase as of June 5, 2023.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

Illustration: Dom Guzman

For years now, startup investors have been busily writing checks to founders applying artificial intelligence in creative new ways to their respective industries.

That momentum continued in 2022, with investors signing on to back some rather quirky applications of AI technology. 

How quirky? Using Crunchbase data, we assembled a list of some of the more unusual-seeming models. If they pan out, expect a future where AI-enabled tech can customize your wig, cut your meat, sort your trash and track lice on your fish farm. (If you have a fish farm, that is.)

Without further ado, here are six recently funded or launched AI endeavors applying technology in surprising ways:

Customize your wig: New York startup has seen the AI future, and it’s all about making wigs. The company raised $5 million in April, with tennis star listed as a backer. Parfait uses artificial intelligence to capture a client’s exact measurements and skin tone when crafting its wigs. The company’s goal is to speed up the process and significantly cut costs for producing high-quality custom wigs, which usually cost upward of $2,000 and take months to make.

Upgrade your skincare: Estonian startup is applying artificial intelligence technology to the pressing task of figuring out which skincare products work best. The company, which counts and among its partners, operates an AI engine trained on millions of face and skin images to match users to appropriate products based on over 14 skin health and beauty metrics.

Give you a good night’s sleep: makes high-tech mattresses optimized for restorative rest by tracking sleep duration, stages and efficiency. In July, the Silicon Valley company pulled in $20 million in a round led by mattressmaker .

Be your friend: , an app that makes digital avatars that interact with people in the role of friend and confidant, has drawn over 10 million users in its few short years of existence. As users chat with the avatar, the AI learns more about them and improves its ability to provide personalized responses. VC-funded mental health app , which is also AI-powered, functions more as a mental health tool — it “listens,” asks questions and makes recommendations. Both startups join several other AI tools that purport to offer the kind of emotional support and interpersonal interaction one usually expects from a human. 

Keep your fish healthy: If you’re a fish farmer, AI technology can help deliver healthier fish at lower cost. That’s the pitch from , a 5-year-old Norwegian startup that raised $25 million in a July Series B round and counts as a backer. Aquabyte uses AI to scale adoption of tools that enable automatic lice counting, welfare scoring and biomass control, among other data-driven offerings. Meanwhile, another aquaculture-focused AI startup, Norway’s , also scored funding this year, pulling in $6 million in an August Series A.

Warn about a flood: In recent quarters, we’ve been seeing a good bit of venture investment directed at weather-related startups. Now, one AI-focused startup is promising better tools to predict one of the most worrisome of weather developments: flooding. , calls its offering an AI- and satellite-powered technology that can track floods in near real time anywhere on Earth. To further this effort, the New York-based company pulled in $12 million in Series A funding in September.

Methodology

The dataset for the funding analysis includes companies categorized by Crunchbase as one of several sectors tied to fintech and financial services. Companies included in the results may be fully financial services-focused or include financial services as a significant focus of their business models. Funding rounds included in the results totaled at least $200,000 and included companies founded no more than 20 years prior to the funding.

Illustration:

It also revealed that it had received a “previously undisclosed $75 million investment” last year, bringing its total funding to , according to Crunchbase data. ThredUP did not give further details on the $75 million investment.

Its last disclosed venture round before the newly announced investment, its Series E led by , raised $81 million in September 2015.

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The fashion resale space is one that’s heating up as more consumers go online to buy and sell clothing and accessories. ThredUP calls itself the “world’s largest fashion resale marketplace,” with 35,000 brands available at up to 90% off retail prices.

ThredUP competes with Redwood City’s in the area. Poshmark, which has in total funding, last raised $87.5 million in its Series E round in November 2017.

Poshmark is reportedly looking to go public, according to an April 2019 report from the The company had nearly $150 million in revenue and “narrow losses” last year, WSJ reported.

It wouldn’t be the first fashion resale startup to go public this year—another notable competitor, , went public in June after raising  in venture funding.The company had a valuation of when it was private, and it is now valued at $1.06 billion. Its stock, which had an all-time high of $28.90 when it began trading on June 28, was trading at $17.22 on Wednesday afternoon. (The company’s equity was as the market digested trade concerns and recession jitters.)

The three companies, while related, don’t do exactly the same thing. The RealReal specializes in luxury consignment goods, whereas Poshmark and ThredUP mix both low-end and high-end items. The RealReal has a team of authenticators who verify that every item accepted for consignment and sold by the company isn’t a knockoff. Poshmark offers authentication as a premium service and ThredUP authenticates items that are sent to the company as part of its LUXE program.

ThredUP’s fresh round of funding follows its announcement last week that it would partner with JC Penney to bring second-hand clothes and accessories to JCP’s retail stores. ThredUP items will be available at 30 JC Penney stores, and the startup started offering its items at 40 Macy’s locations since the beginning of this month as well.

With the new cash, ThredUP is starting what it calls “resale-as-a-service,” where retailers and brands can partner with the startup to add inventory to their own stores and websites, according to a announcing the funding. Retailers will also be able to issue “Clean Out Kits” to shoppers who turn in clothes they don’t want anymore to ThredUP for shopping credits.

With one company public and the other two richly-valued and well-funded it will be interesting to see which is the next of the three to file for an IPO.

Illustration Credit: 

Correction: We misinterpreted thredUP’s previously undisclosed $75 million investment and added it to its total funding. The total funding and chart have been corrected. We regret the error.