Global VC investment falls to lowest level in nearly 7 years as number of US$1bn+ deals falters
Global VC investment fell from a five-quarter high of $95.5bn in Q2’24 to a nearly seven-year low of $70.1bn in Q3’24, amid ongoing geopolitical conflicts, the continued exit drought, anticipated seasonal lulls in investment in several key jurisdictions, and the uncertainty driven by the upcoming US presidential election.
The decline came despite another solid quarter of VC investment in AI; the sector accounted for six of the ten largest VC deals globally, including a $1.5bn raise by Anduril Industries and a $1bn raise by Safe Superintelligence, according to the Q3’24 edition of KPMG Private Enterprise’s Venture Pulse — a quarterly report that shines a spotlight on VC investment trends globally and in key jurisdictions around the world.
While the Americas continued to attract the largest share of VC investment in Q3’24, total investment in the region still fell from $58.6bn in Q2’24 to $41.4bn in Q3’24. In Asia, VC investment fell from $18.5bn to $15.6bn quarter-over-quarter, while in Europe it dropped from $17.9bn to $12.5bn.
Global exit value fell to a six-quarter low of $39.2bn, driven primarily by a slowdown in US-based exit activity—which fell from $25.2bn to $11.2n between Q2’24 and Q3’24, as the number of exits fell to a seventeen-quarter low of 244. Asia, which saw a five-year low of $11.2bn in exit value in Q2’24, saw exit value jump to $18.2 in Q3’24.
“AI investments drove the lion’s share of VC investment activity in Q3’24,” said Conor Moore global head, KPMG Private Enterprise, KPMG International. “But even within AI, a lot of deals were somewhat smaller than we’ve seen in recent quarters. This reflects somewhat of a trend in investors shifting their focus from core AI companies focused on LLMs (Large Language Models) and the like to companies with highly targeted industry solutions. Defense-tech was also a big winner in this quarter, in addition to biotech.”
Q3’24—Key Highlights
Global VC investment dropped from $95.5 bn in Q2’24 to $70.1 bn in Q3’24; the number of VC deals dropped from 9,270 to 7,227 over the same period.
VC investment in the Americas dropped from $58.6 bn in Q2’24 to $41.4 bn in Q3’24—including from $55.5 bn to $37.5 bn in the US; in Asia, VC investment dropped from $18.5 bn to $15.6 bn, while in Europe it dropped from $17.9 bn to $12.5 bn.
Global corporate VC investment fell from $54 bn to $35.2 bn between Q2’24 and Q3’24; this included declines from $34.4 bn to $19.6 bn in the Americas—including from $32.7 to $17.8 bn in the US—from $10.7 to $9.4 bn in Asia, and from $8.5 bn to $5.9 bn in Europe.
Global exit value dropped from $52.9 bn in Q2’24 to $39.2 bn in Q3’24.
Exit activity in Asia rose from $11.2 bn to $18.2 bn quarter-over-quarter, while it fell from $25.4 bn to $11.2 bn in the Americas, and from $16.3 bn to $9.8 bn in Europe.
Global fundraising activity was well off the pace needed to match even 2023’s subdued total of $202.8 bn; at the end of Q3’24, global fundraising stood at $143.1 bn.
AI sector sees six of the top ten deals globally in Q3’24, including largest deal in every key region
While VC investment could be considered low in all regions of the world this quarter, AI continued to garner a lot of interest in Q3’24. Six of the ten largest deals during the quarter were AI focused, including a $1.5 bn raise from US-based Anduril Industries, a $1 bn raise by US-based Safe Superintelligence, a $688 m raise by China’s Baichuan AI, a $$640 m raise by US-based Groq, a $500 m raise by Canada-based Cohere, and a $483 m raise by Germany-based Helsing.
While core AI firms continued to attract VC investments during Q3’24, including Safe Superintelligence, Baichuan AI, and China-based Moonshot AI ($300 m), VC investors also showed very strong interest in AI-driven industry solutions. In particular, AI-powered defense-tech companies raised large rounds in Q3’24, including Anduril Industries and Helsing. China also saw AutoAI, which enables automotive companies to embed AI into their vehicles, raise $107 m.
Americas attracts $41.4 bn in VC investment in Q3’24; investment in Canada more than doubles
VC investment in the Americas fell from $58.6 bn across 4,104 deals in Q2’24 to $41.4 bn across 3,124 deals in Q3’24. The US accounted for a large majority of this total—$37.5 bn across 2,794 deals. AI was by far the biggest ticket in the US—accounting for the only two $1 bn+ deals in Q3’24 globally. Life sciences also attracted large deals, including a $370 m raise by autoimmune disease focused Candid Therapeutics, a $350 m raise by weight loss drug company Metsara, and a $325 m raise by programable cell cancer therapies company ArsenalBio.
Canada had an excellent quarter of VC investment in Q3’24, the total more than doubling from $1.2 bn to $2.7 bn quarter-over-quarter, led by a $900 m raise by legaltech Clio and a $500 m raise GenAI-focused Cohere. The Q3’24 total represented a ten-quarter high for Canada. In Brazil, VC investment dropped from $878 m to $473 m between Q2’24 and Q4’24, while in Mexico it dropped from $415 m to $358 m.
VC investment falls to four-year low in Europe—only Germany sees VC investment grow
VC investment in Europe plummeted from $17.9 bn in Q2’24 to a level not seen since Q2’20 ($12.5 bn) in Q3’24. Despite continuing to attract the largest share of VC funding in the region, the UK saw VC investment drop from $7.1 bn to $3.4 bn quarter-over-quarter.
Germany was the only major jurisdiction in Europe to see VC investment increase—from $2 bn to $2.4 bn between Q2’24 and Q3’24. Germany also accounted three of Europe’s five largest deals during Q3’24, including a $483 m raise by AI-enabled defense-tech Helsing, a $278 m raise by satellite launch services company Isar Aerospace, and a $200 m raise by smart workout solution firm EGYM. Raises by France-based mobile games maker Voodoo ($385 m) and UK-based open payments firm Form3 ($$220 m) rounded out the top five.
VC investment in Asia-Pacific falls; Japan bucks trend with a twelve-quarter high
VC investment in Asia dropped to a seven-year low of $15.6 m in Q3’24, driven by the continued slowdown in sizes and declining deal values; the largest raises in Q3’24 included a $788 m raise by Philippines-based Globe Fintech Innovation, a $688 m raise by Baichuan AI and a $415 m raise by semiconductor company ICLeague—both in China, and a $362 m raise by Singapore-based semiconductor firm Silicon box.
China continued to attract the largest share of VC investment in the region ($6.1 bn), although it was the lowest quarter of investment China has seen in over ten years. Despite a decline in Q3’24, VC investment in India remained solid at $3.6 bn, helped by a number of raises by consumer-focused businesses, including a $360 m raise by quick delivery company Zepto. VC investment in Japan bucked the downward trend, rising to a twelve-quarter high of $1.8 bn in Q3’24, driven by a ten-quarter high of deals volume (356), including a $214 m raise by Sakana AI.
Waiting game heading into Q4’24, but all eyes on 2025
With the US election looming large on the global stage heading into Q4’24, VC investment will likely remain subdued for most of the quarter as investors take a wait-and-see approach until the results are decided. AI will likely remain a hot area of investment, in addition to defense-tech given ongoing global geopolitical tensions.
There is a growing sense of optimism that exit activity is readying for a rebound, which would be very beneficial for the VC market globally heading into 2025. “We’ve had a long dry spell on the exit front globally, but market conditions are improving,” said Francois Chadwick, partner, KPMG in the U.S.. “With interest rates dropping, M&A will likely start ticking up because acquisitions are becoming more viable. And while IPO activity will likely remain slow through Q4’24 due to the US election, all eyes will be on the IPO market heading into 2025.”