Global VC investments rose 5.4% to $368.5B in 2024, but deals fell 17% | NVCA/Pitchbook

World enterprise capital investments rose to $368.5 billion in 2024, up 5.4% from $349.4 billion a 12 months earlier, in response to the primary have a look at the Q4 2024 Pitchbook-NVCA Venture Monitor report.

However the variety of world offers in 2024 fell 17% to 35,686 from 43,320 a 12 months earlier in 2023. AI offers as a proportion of all offers rose for the 12 months, as you’ll be able to see within the chart beneath.

The 2024 world offers are down 50.9% from $751.5 billion within the peak 12 months of 2021 and down 37% from 57,068 in deal rely in 2021.

AI offers are large a part of the image now. There have been 8,343 world AI offers in 2024, down 3.6% from 8,661 in 2023 and down 16.6% from 10,007 in 2021.

The worth of these world AI offers in 2024 was $131.5 billion, up from 52% from $86.3 billion in 2023 and down 6% from $140.2 billion in 2021.

AI and machine studying had been 35.7% of world deal worth in 2024, up from 24.7% in 2023. And AI and machine studying had been 23.4% of the worldwide deal rely in 2024, up from 20% in 2023. In 2021, AI was 18.7% of world deal worth and 17.5% of world deal rely.

This autumn world numbers

On the worldwide stage in This autumn, Asia Pacific’s enterprise market has struggled by way of the previous couple of years, one thing that didn’t change in 2024, Pitchbook lead VC analyst Kyle Stanford mentioned.

In contrast with Europe and the U.S., the quantity of dry powder constructed up throughout the varied markets throughout APAC was a lot smaller, additional pressuring dealmaking over the previous 12 months. China, which has pushed round half of the annual deal exercise for APAC, has seen a fabric decline in exercise, resulting from each financial challenges throughout the nation, in addition to the tensions with the U.S. authorities, which has curtailed exercise by U.S.-headquartered corporations. Simply 20.4% of deal rely occurred in Asia, the bottom proportion previously decade.

Globally, AI has continued to dominate the headlines and funding focus of traders regardless of some noting that the funding exercise just isn’t sustainable long-term. Whether or not or not that true is trivial within the present second.

Simply over half of all VC invested globally throughout This autumn went to an AI-focused firm. Its true that quantity was closely influenced by the likes of OpenAI, Databricks, xAI, and different well-known corporations elevating for share buybacks and funding into chips and computing vitality wants, however crucial components is the extent of capital availability for AI in contrast with different sectors, Stanford mentioned.

The proportion of complete offers going to AI corporations has persistently elevated over the previous couple years as massive corporates and traders alike transfer to harness the anticipated efficiencies of the subsequent tech wave, he mentioned.

“VC-backed exits haven’t been sturdy traditionally for APAC, although many markets are nonetheless too younger to develop a wholesome exit surroundings,” he mentioned. “The dearth of exits throughout lots of the areas has stored many overseas traders weary of elevated exercise through the market slowdown. Japan has been an outlier by way of rely, as many IPOs throughout the nation have helped drive returns to traders. In 2024, 19% of the worldwide VC-backed exits originated in Asia-based corporations.”

Fundraising has been sluggish globally, as new commitments dropped simply over 20% YoY. The dearth of exits has had a big influence on fundraising for Asia as LPs have been much less inclined to reup commitments at the moment. 2024 marked the bottom 12 months for brand new commitments since 2018, and was the bottom 12 months for closed funds out there previously decade. North America and Europe equally struggled to safe new commitments to enterprise funds.

This autumn U.S. offers

U.S. Dealmaking remained comparatively strong within the fourth quarter of 2024 from a rely perspective, and elevated barely by 3.7% in comparison with a 12 months earlier, Pitchbook and the NVCA mentioned. Within the quarter, AI offers accounted for almost half (46.4%) of complete US deal worth.

Stanford mentioned it appears counterintuitive to the narrative out there over the previous few years, however is indicative of holdover of sure mechanics of enterprise from a number of years in the past.

“What has occurred is that the surplus of dry powder from the excessive fundraising years of 2021 and 2022 have stored many traders energetic out there regardless of the dearth of returns,” Stanford mentioned. “With the sluggish fundraising years of 2023 and 2024, we must always seemingly see this relative robustness begin to deteriorate as fund run by way of their obtainable capital and aren’t in a position to increase a subsequent fund.”

Synthetic intelligence continues to be the story of the market, and drove a close to majority of {dollars} for VC in 2024, he mentioned. OpenAI, xAI, Anthropic, and others have change into synonymous with outsized offers in enterprise, and seemingly function in a unique funding surroundings than most VC-backed corporations who proceed to wrestle with decrease capital availability, Stanford mentioned.

However the lack of exits stays the story of the enterprise market, even because the outlook is extra hopeful, he mentioned. Simply $149.2 billion in exit worth was created throughout 2024, largely coming from a handful of IPOs. Unicorns, which maintain round two-thirds of the U.S. VC market worth, have held tight as non-public corporations, creating stress on traders and restricted companions with the dearth of distributions.

Merges and acquisitions had been was additionally “silent in 2024,” with few massive offers to notice, Stanford mentioned. A extra acquisition-friendly surroundings in 2025 might set the stage for a renewed M&A market, particularly if a soft-landing for the financial system might be absolutely engineered, he mentioned.

Within the U.S., fundraising was dominated by massive, established corporations. Thirty corporations accounted for greater than 68% of complete fundraising worth in 2024. This can be a pattern that has been creating over the previous few years, however hit a forefront final 12 months, Stanford mentioned.

Lots of the rising managers that raised funds through the ZIRP-era increase within the VC market have been unable to generate returns, and have portfolios troubled from the valuation modifications which have occurred through the market shift. With no monitor document to talk to, many corporations are discovering a really difficult market to boost new commitments from LPs, Stanford mentioned.

European VC market

In Europe, VC deal worth mirrored a slight decline, whereas deal counts dropped by roughly 16% in comparison with 12 months in the past, mentioned Pitchbook analyst Nalin Patel, as a extra cautious surroundings was on show in 2024.

European deal exercise was down throughout earlier financing levels, the vast majority of verticals, and a number of other areas as more durable marketplace for funding was evident.

He mentioned AI drove simply over 1 / 4 of deal worth to the area throughout 2024, on simply greater than 23% of accomplished financings. The massive, outsized offers attributable to different enterprise markets didn’t materialize in the identical quantity in Europe, protecting the proportion of deal worth consistent with rely.

And he mentioned exit worth picked up in 2024, largely pushed by the itemizing of Puif. In any other case it was a quiet 12 months for European VC-backed exits, notably on the listings entrance as corporations prevented exits.

“We anticipate exits to choose up in 2025 as market circumstances enhance,” Patel mentioned.

Capital raised by European-based VC funds was flat YoY in 2024 and remained beneath the height set in 2022. Fund counts additionally dipped in 2024 dropping by roughly by a fifth in comparison with 2023. Decrease fund counts and flat capital raised figures point out fewer, however bigger funds closed in 2024.

The outlook?

A technique to have a look at how a lot dry powder the {industry} has and whether or not VCs are profitable themselves is to look how effectively they’ve achieved elevating cash themselves. That’s the place the information appears pretty bleak, or a minimum of is corrected now in comparison with the overhyped days of 2021.

In 2024, 1,344 funds raised capital, down from 2,333 in 2023 and a document 4,283 in 2021. When it comes to capital raised, the 1,344 VCs raised $169.7 billion in 2024, down from $213.8 billion in 2023 and down from the document $404.4 billion in 2021.