Global Venture Capital Outlook: The Latest Trends (2024)

FAQs

What is the trend in venture capital in 2024? ›

In the second quarter of 2024, global venture capital funding climbed 5% quarter over quarter, reaching $94 billion across 4,500 deals (see Figure 1). This marked the second consecutive quarter of growth following a year of decline. Investments in AI, healthcare, and financial services fueled much of the activity.

The industries VCs are funding. As we continue moving into 2024, some of the trending industries and hot sectors that venture capitalists are investing in include defense technology, AI and blockchain, fintech, space technology, sustainable solutions, and biotech.

The year 2025 promises to be a dynamic period for VC funding, with significant investments flowing into technology, healthcare, fintech, and green technologies. Countries like the US, China, and India will lead the charge, supported by top VC firms like Sequoia Capital, Andreessen Horowitz, and SoftBank Vision Fund.

US VC fundraising was expected to increase in 2024, surpassing 2023 figures and aligning with 2020 levels. However, the liquidity crunch and sluggish exit rates have pressured fundraising activities. As of mid-2024, fundraising has reached approximately 30% of 2023's total.

Venture capital raised just $191.2 billion, down 43% year-over-year, and the number of companies funded collapsed to 1,825, down 41% year-over-year. While that seems bad, 2024 has gotten even worse.

IMARC (a leading market research company) forecasts global Venture Capital investment to grow at a CAGR of around 16% over 2021-2026: if achieved, this would represent even faster growth than over the last five years.

Advancements in AI and data-driven approaches are enabling VC firms to operate more efficiently, reducing the need for large teams of analysts and associates. This trend is leading to a leaner, more focused workforce, emphasizing quality decision-making and strategic deal-making.

According to a recent EY survey, 93% of CEOs said they plan to increase or maintain investment in corporate venture capital funds in 2024, signaling an expanding pool of VC capital and potential offramp to M&A activity.

Consequently, investors are cautious. As VC-backed projects experience valuation corrections, VC fundraising slows because the data points to lower risk return on investment.

The VC ecosystem is seeing optimistic tides in 2024. The tech, healthcare, and fintech industries are expected to attract more investments, especially on the onset of AI.

What is future of cities venture capital? ›

The venture capital arm of the Future of Cities™ makes targeted capital injections into key industries and innovations that drive regenerative development, advance sustainability practices, support smart city growth, and more.

With $20.4 billion in open funds tracked so far this year and some “lags in data collection,” PitchBook now forecasts a total venture capital haul for 2024 of $79.3 billion—with a downside estimate of $58.8 billion and an upside of $92.1 billion.

While the market may be approaching a new equilibrium, roughly half of the US VC-backed companies in existence still need to raise capital in the coming quarters. This will test the founders' abilities to navigate the complexities of today's fundraising climate. However, this remains a good time to build a company.

Venture is forecast to grow earnings and revenue by 10.1% and 6.9% per annum respectively. EPS is expected to grow by 10.5% per annum.

The Global Economy in a Sticky Spot

Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 percent in 2024 and 3.3 percent in 2025. Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization.

The industry anticipates a reopening of the exit window by the end of 2024 or early 2025, following a trend observed in previous downturns. This phase is characterized by growing private market investments and a resurgence of exits and distributions.

'Dry Powder' Surplus

At the end of Q1 2024, dry powder reached a record-high surplus of over $300 billion. This figure—also known as uncommitted capital— reflects the remnants of booming fundraising in 2021 and 2022, and the halt in capital spend since that time, as well as a sign of economic conditions.