A Look at the Venture Capital Landscape in Q1 2024

With the first quarter of 2024 behind us, analysts are now taking a look at the dealmaking landscape so far this year. CB Insights has released their State of Venture Q1’24 report, showing a “mixed bag” for VC dealmaking to start the year.  

Their data shows dealmaking dropping to a 7-year low in Q1. It was also the eighth straight quarter we saw a drop in equity deal volume. However, they note that several blockbuster deals contributed to a modest rebound in funding (11% QoQ), driven by generative AI.

Below, we look at the highlights from the CB Insights report.

• Large Deals and AI Fuel Q0Q Funding Climb: The 11% QoQ climb in venture funding brought the total for the quarter to $58.4B. As noted below, several large-scale deals drove this increase, with generative AI deals playing a key role. The gain here is positive momentum, but data shows funding is still down 21% from Q1’23 and 62% from Q1’22.
• Deals are Down Overall, But US Sees a Small Increase: Globally, the number of deals continues to slide, showing a 7% decline with 6,238 deals. While Asia and Europe saw 8% and 9% declines, respectively, the US saw a 1% increase in deals QoQ.
• Positive News for Mega Rounds: Deals worth $100M+ grew 30% QoQ, showing 105 transactions for the quarter. They made up almost half of the quarter’s total funding and were driven predominately by large corporate investors.
• Unicorn Numbers are Slightly Down: There were 19 new unicorns between the US, Asia, and Europe. This is down a bit from the 23 we saw in Q4 2023. But interestingly, Europe had five new unicorns, a 5-quarter high for the region.
• Fintech is Down, Digital Health and Retail Tech are Up: Funding for the fintech sector saw a significant drop – down 16% QoQ. In contrast, digital health and retail tech saw gains. Several biotech mega-rounds led to a nearly 50% increase in funding in the digital health space.
• Silicon Valley Continues to Dominate: $4 out of every $10 in US funding went to Silicon Valley startups, bringing in $14.4B in Q1’24 and 42% of the total funding in the US. For reference, that is more than 3x the next US metro (New York with $4.4B). They note that this is of no surprise as a third of US funding has gone to Silicon Valley startups since 2020.

The global economic recovery will not happen overnight, and neither will the rebound to the record funding levels we were seeing a few years ago. And we might be rebounding to more realistic numbers. There are definitely some bright spots in this report and some areas we are watching closely as we continue to move through Q2.