Vital Venture Capital Funding Insights in 2024 So Far

It’s tough out there in the world of venture capital. Investors are cautious in the face of interest rate hikes by the Federal Reserve Bank, record inflation, geopolitical instability and resetting valuations. 
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As we move towards the end of Q2, it’s a good time to take the pulse of the market so far, examine what deals are being made, in what areas, and what this all means for your startup fundraising plans.

The Big Picture

Pitchbook data revealed that U.S. investors injected $170.6 billion into startups in 2023, a decrease of nearly 30% from the $242.2 billion recorded in 2022. This marks a consistent decline since the peak of U.S. venture funding in 2021 when startups raised $348 billion. 

This trend isn’t limited to the US. Venture funding has slowed globally, as investors continue to tighten their belts and valuations reset. Venture capital funding reached just over $22 billion in April 2024, a flat month on month figure.

However, there are tentative signs of optimism. In Q1, venture funding in American and Canadian companies totaled $35.2 billion in Q1 of 2024, a gain of 14% from Q4. There is also a surplus of ‘dry powder’, or uncommitted capital, which reached record highs of $317 billion, suggesting investors are still looking for promising opportunities.

Any Winners?

Yes, actually. Despite investor caution, more startups have been able to secure ‘megadeals’  - deals of $100 million or more - at this point of the year than before, a 58% raise on comparable deals this time last year.

Key areas of investor focus look to be information technology, healthcare and biotech, and business and financial services. Biotech was the biggest area, comprising 38 of those total 58 megadeals. Cybersecurity was another important area, with 10 of those larger deals. 

Megadeals may be some way off where you are today, but they indicate that investors are willing to go all in on opportunities with the right potential.

Generative AI and the Future of VC Funding

Research by Gartner suggests that by 2025, more than 75% of venture capital and early-stage investor executive reviews will be informed using artificial AI and data analytics. 

AI looks set to play a pivotal role in how investors evaluate deals by streamlining workflows, speeding up research and due diligence and identifying crucial qualitative and quantitative insights to make data-driven decisions.

Feeling the Heat in Fundraising

Gone are the days of young founders raising huge amounts on little more than a half-formed business model and a plan for short-term exit. 

Investors are looking for truly innovative companies with competent leadership and real plans for demonstrable growth. Product-market fit and customer-centric solutions based on real need will be key.

This has the potential to make startup fundraising more competitive than ever. 

Consider the Alternatives to VC Funding

VC funding isn’t the only option, particularly if you’re at the beginning stages of your fundraising journey.

As we navigate through 2024, the landscape of venture capital is marked by both significant mega-deals and a resilient appetite for smaller investments.

While the influx of capital into biotech, AI, and cybersecurity demonstrates strong investor confidence, it's essential to stay mindful of alternative funding avenues.

Exploring options like grants and specialized services can provide critical support for emerging ventures..

Holly Bennett

Senior Funding Analyst

In fact, a large grant can help you get up and running, and help to prepare you to seek VC funding later down the line.

SBIR Grants

The US government invests billions of dollars annually to support new technology, products and processes that improve the lives of millions of Americans. 

The Small Business Innovation Research (SBIR) program offers federal grant funding of up to $2 million to small US-based businesses, supporting high-impact research and development projects to realize their commercial potential and strengthen the American economy.

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