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The State of Venture 2024 and Trends to Watch
by Kannan Paul

June 2024

The current venture investment climate is experiencing a cautious yet strategically focused market. Global venture funding reached $66 billion in Q1 2024, which is up 6% from the previous quarter but down 20% year-over-year. This positions Q1 2024 as one of the lowest quarters for startup funding since 2018, reflecting a careful approach among investors.


Despite this overall decline, sectors like AI and healthcare are still attracting substantial investments. AI startups secured $11.4 billion, while healthcare and biotech companies raised $15.7 billion in Q1 2024. Companies such as xAI have raised significant sums despite the overall drop in funding. This indicates strong investor confidence in innovative fields as well as potentially more longer term resilient fields. As to whether this is investor fomo or strategic thinking is more subjective but historically the winning horse has returned well for risk hungry investors over the longer term.


Earlier stage funding showed resilience with a year-over-year increase, totalling around $29.5 billion. This growth was driven by significant fundings in AI, electric vehicles, and green energy. Seed and angel investments also remained relatively robust, indicating a preference for early-stage ventures during uncertain times. However, late-stage funding experienced a sharp decline, dropping 36% year-over-year, largely due to a challenging exit environment and stringent investment criteria.


Geographically, the venture capital landscape varied significantly. While overall the Americas saw a decline in both investment and deal volume, certain sectors and stages were significantly up, while Europe experienced an increase in overall VC investment, driven by large deals such as the $5.2 billion raise by H2 Green Steel in Sweden, Monzo raising $610m this year etc. As expected, the Asia-Pacific region witnessed a decline in both investment and deal count despite some large individual deals in China.  India on the other hand could be a good longer term bet as one of the few regions that has the potential to show double digit growth, year on year for a while; with relative political and economic stability (aside from a dependence on foreign oil right now), a burgeoning middle class and a population hungry to modernise means that there are opportunities abound for the adventurous investor.


Elsewhere, economic conditions, with inflation conservatively estimated in double digits, and geopolitical tensions continue to influence the market. There’s a compelling argument for deploying some capital into well-valued, solid private growth investments.


Trump’s recent conviction has added a marginal layer of political uncertainty, which could affect investor sentiment and market dynamics globally. Moreover, the geopolitical landscape, particularly the relationship between the Middle East and Israel, remains a factor. The relationship between Israel and its neighbouring countries, remains in creating uncertainty as well as what the election results in the US might hold for the regions and its invest-ability. This uncertainty just seems to fuel the worlds’ interest in investment into US ventures. Despite the longer term issue of the federal debt (currently at $34tn), the economy is flourishing, inflation seems to be stabilizing and interest rates are forecast to be cut…


Historically, some of the most successful businesses were founded during economic downturns. The key is to remain open to these opportunities while others are still recovering.



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