According to a study, US VC investment deal value reached $36.6 billion in 2,882 deals in the first quarter, down from $51.6 billion in 4,026 deals in the same period last year. new report.
The first quarter of 2024 was a relatively quiet (or you could say weak) quarter for U.S. venture capital investment. According to a first look at the report, there were few large deals closed during the quarter, but the overall number of deals remained relatively high on a comparable basis. Pitchbook and the National Venture Capital Association.
Although the quarterly transaction value was the lowest quarterly total since 2017, it was noted that there were no outlier transactions and capital availability remained low, the report said.
On the positive side, the data shows that valuations have increased slightly on the median across several stages. This is likely due to relatively strong public market performance and some compounded expansion, as well as a bias toward the ability of fundamentally strong companies to continue raising capital in a depressed venture market, Pitchbook said. Ta.
Investors remain cautious in this environment as uncertainty continues. Sticky inflation has pushed expectations for rate cuts into the second half of the year, and a recession remains a possibility. NVCA did not anticipate a meaningful recovery in trading activity in the short term.
us exit
Reddit and Astera Labs' IPOs were highlights of the quarter. Together, the two exits account for 73.4% of the total exits generated through March.
The prospect of increased IPO activity has created a buzz in the market as exits have been very slow over the past two years. Both his IPOs performed well, with both companies maintaining their first performance, but uncertainty remains about their future prospects.
Public market performance continues to be dominated by mega-cap tech stocks, but investors' appetite for high-risk, loss-making companies that cannot tell their stories through AI growth remains to be proven. M&A during the quarter remained extremely difficult for large companies, with the majority of deals not significant in size, the report said.
US fundraising activities
US VC funding turned out to be one of the laggard areas of the venture market in the quarter. The funds raised were just $9.3 billion, 11.3% of the total raised in the already slowing market in 2023.
While dry powder remains at a high level, the slowdown in fundraising is a sign that LPs will be hesitant about VCs, and we should expect a more difficult trading environment in the future. While large mega-funds have driven funding trends for the past few years, Q1's VC funding shows that demand for such vehicles may not exist in today's market. I am.
Europe
Information of sale: European venture capital has had a slow start to the year, with just $17.5 billion (€16.4 billion) in deals across 2,395 loans.
Growth in the European Union continues to be slower than expected, putting pressure on business growth and investment activity in the region. Late-stage and venture growth-stage valuations have declined slightly, while seed- and early-stage valuations remain strong as they move away from public markets.
Exit: Q1 2024 was the seventh consecutive quarter with exit values below $7.5 billion (€7 billion). Just three exits have made him worth more than $107.3 million (100 million euros). The lack of access to public markets for venture capital-backed companies, especially unicorns and other well-regarded companies, is compressing returns and making the investment environment even tougher.
Fundraising activities: By March, only 47 funds had closed, increasing the capital available to the European venture market by $5.37 billion (€5 billion). Globally, funding has slowed significantly due to limited partner vigilance. The slowdown in the exit market has left its own mark on financing. Without revenue to recycle into a new VC fund, LPs are left with options rather than being over-allocated to ventures. Only four funds closed with at least $268 million (€250 million) invested.
global
Information of sale: Global VC trends mirror trends in the US and Europe. Transactions were relatively subdued during the quarter, with an estimated 10,222 investments totaling $75.9 billion.
Markets in Asia and Latin America are struggling to maintain the pace of investment seen in 2021, but the reasons are not significantly different from more established venture markets. The global economy continues to put pressure on venture activity around the world as the venture market adjusts to a more sustainable pace of investment.
Exit: The $30.7 billion exit value is the lowest quarterly exit value in the global venture market since Q4 2016. Large companies remain private, squeezing market profits and putting further pressure on investment and financing.
Fundraising activities: The $30.4 billion in total VC commitments closed in the first quarter represents only 16.2% of total VC commitments closed in 2023, 9.3% of total VC commitments closed in 2022, and 5.5% of total industry commitments in 2021. do not have. VCs around the world are struggling to return capital. The past two years have seen a significant decline in LPs, but due to the disruption, few are ready to recommit to the market in the current environment. 33% of total commitments in the first quarter were made to North American-based VC funds.