Venture capital investments globally have reached $368.5 billion in 2024, marking a 5.4% increase from $349.4 billion in 2023, as reported in the Q4 2024 Pitchbook-NVCA Venture Monitor report. Despite this increase in investment value, the number of deals has significantly decreased, falling by 17% from the previous year, with 35,686 global deals reported in 2024 compared to 43,320 in 2023.
The report highlights a notable trend in the venture capital landscape: artificial intelligence (AI) continues to represent an increasing share of the investment pie. In 2024, there were 8,343 global AI deals, a marginal decline of 3.6% from 8,661 in 2023. The total value of these AI deals soared to $131.5 billion, up by 52% from $86.3 billion in the previous year, while still down from $140.2 billion in 2021. AI and machine learning accounted for 35.7% of the overall deal value in 2024, up from 24.7% in 2023, further emphasising the sector's growing significance in venture capital.
Kyle Stanford, lead VC analyst at Pitchbook, noted that just over half of all venture capital invested globally during Q4 2024 was directed towards AI-focused companies. This trend was largely influenced by prominent figures in the industry, including OpenAI and Databricks, which have raised substantial funds for various initiatives including share buybacks and investments in computing infrastructure. He observed that “the proportion of total deals going to AI companies has consistently increased over the past couple years as large corporates and investors alike move to harness the expected efficiencies of the next tech wave.”
Despite the focus on AI, the report typified the ongoing struggles faced by the Asia Pacific venture market. According to Stanford, “the amount of dry powder built up within the various markets across APAC was much smaller”, which has exacerbated the decline in deal volume. Activity in China, a major player in Asia's venture market, was particularly affected by ongoing economic challenges and geopolitical tensions with the U.S., resulting in only 20.4% of deal counts within the region, the lowest proportion in the past decade.
In the U.S., venture deal-making exhibited relative strength, seeing a 3.7% increase in counts compared to the previous year, with AI transactions constituting nearly half (46.4%) of total deal value in Q4 2024. Stanford remarked on how “the excess of dry powder from the high fundraising years of 2021 and 2022 have kept many investors active in the market despite the lack of returns.” However, he anticipates that as funding slows, there could be a downturn in the robust deal-making environment observed in the U.S.
Over in Europe, the landscape appeared more subdued. VC deal value saw a slight decline, with deal counts tumbling by approximately 16% compared to a year earlier. Patel, another analyst at Pitchbook, indicated that AI had a significant share of the market, driving just over a quarter of deal value, although overall activity was hampered by a decline across earlier financing stages and various sectors. He mentioned that “exit value picked up in 2024, largely driven by the listing of Puif,” but stated that it was otherwise a quiet year for exits in Europe.
The report also illustrates a wider funding slowdown, with new commitments to venture capital dropping over 20% year-on-year, leading to the lowest level of new commitments since 2018. A total of 1,344 funds raised capital in 2024, down from 2,333 in 2023 and a record 4,283 in 2021, capturing just $169.7 billion compared to $213.8 billion in 2023, indicating a significant contraction in fundraising activity across all regions. This evolving venture capital landscape underscores the growing importance of AI, even amidst broader economic challenges and fluctuating investment confidence.
Source: Noah Wire Services