Whole world venture capital investment increased to $368.5 billion by 2024, up 5.4% from $349.4 billion last year, according to a first look at Q4 2024 Pitchbook-NVCA Venture Monitor report.

But the number of global deals in 2024 fell 17% to 35,686 from 43,320 a year earlier in 2023. AI deals as a percentage of all deals rose for the year, as you can see in the chart below.

2024 global deals were down 50.9% from $751.5 billion in the peak year of 2021 and down 37% from 57,068 in 2021’s deal count.

AI deals are a big part of the picture today. There will be 8,343 global AI deals in 2024, down 3.6% from 8,661 in 2023 and 16.6% from 10,007 in 2021.

The value of global AI deals in 2024 was $131.5 billion, up 52% ​​from $86.3 billion in 2023 and down 6% from $140.2 billion in 2021.

AI and machine learning will account for 35.7% of global deal value in 2024, up from 24.7% in 2023. And AI and machine learning will account for 23.4% of global deal count in 2024, up from 20% in 2023. In 2021, AI is 18.7% of the global deal value and 17.5% of the global deal count.

Q4 global numbers

At the global level in Q4, the Asia Pacific venture market has struggled for the past few years, something that has not changed in 2024, said Pitchbook lead VC analyst Kyle Stanford.

Compared to Europe and the US, the amount of dry powder accumulated within various markets across APAC is much smaller, further pressuring the deal making over the past year. China, which drives nearly half of annual deal activity for APAC, has seen a material decline in activity, due to both domestic economic challenges, as well as tensions with the US government. , which restricts activity at the US headquarters. companies. Only 20.4% of the number of deals took place in Asia, the lowest proportion in the last decade.

Around the world, AI continues to dominate the headlines and focus of investors despite some saying that the investment activity is not sustainable in the long term. Whether it is true or not is irrelevant at this time.

Just over half of all VC investments worldwide during Q4 went to an AI-focused company. It is true that the value is greatly influenced by the likes of OpenAI, Databricks, xAI, and other famous companies that raise for share purchases and investment in chips and computing energy needs, but the most important factor is the level of capital availability for AI in comparison. with other sectors, Stanford said.

The proportion of total deals going to AI companies has steadily increased in recent years as large corporations and investors alike move to harness the expected efficiency of the next tech wave, he said.

“VC-backed exits have not been historically strong for APAC, although many markets are too young to create a healthy exit environment,” he said. “The lack of exits in many regions keeps many foreign investors weary of further activity during the market slowdown. Japan is an outlier in terms of the count, as many IPOs within the country helped drive investor returns. By 2024, 19% of global VC-backed exits will come from Asian-based companies.

Fundraising slowed globally, as new commitments fell 20% YoY. The lack of exits will have a big impact on fundraising for Asia as LPs are less inclined to rescind commitments at this time. 2024 marks the lowest year for new commitments since 2018, and is the lowest year for closed-end funds in the past decade. North America and Europe are both struggling to secure new commitments of business funds.

Q4 US deals

US Dealmaking remained relatively stable in the fourth quarter of 2024 from a quantitative perspective, and slightly increased by 3.7% compared to a year ago, Pitchbook and NVCA said. In the quarter, AI deals accounted for nearly half (46.4%) of total US deal value.

Stanford said that this seems to be contrary to the market narrative of the last few years, but indicates the prevention of some mechanics of the venture from a few years ago.

“What has happened is that the excess dry powder from the high fundraising years of 2021 and 2022 has kept many investors active in the market despite the lack of returns,” Stanford said. “With the slow fundraising years of 2023 and 2024, we will likely see this stability begin to deteriorate as the fund runs through their available capital and will not be able to raise the next fund.”

Artificial intelligence continues to be the story of the market, and will drive almost the majority of dollars for VC in 2024, he said. OpenAI, xAI, Anthropic, and others have become synonymous with outsized venture deals, and seem to be operating in a different funding environment than most VC-backed companies that continue to struggle with low capital , Stanford said.

But the lack of exits remains the story of the venture market, although the outlook is more optimistic, he said. Only $149.2 billion in exit value was generated in 2024, mostly from a few IPOs. Unicorns, which have about two-thirds of the value of the US VC market, are tightly held as private companies, which creates pressure on investors and limited partners with a lack of distributions.

Mergers and acquisitions are also “quiet in 2024,” with few large deals to be noted, Stanford said. A friendlier environment in 2025 could set the stage for a renewed M&A market, especially if a soft landing for the economy can be fully engineered, says he.

In the US, fundraising is dominated by large, established companies. Thirty companies accounted for more than 68% of the total amount of fundraising in 2024. This is a trend that has been developing for the past few years, but hit a plateau last year, said Stanford.

Many of the emerging managers who raised funds during the ZIRP-era boom in the VC market were unable to generate returns, and had portfolios disrupted from the valuation changes that occurred in during the market transition. Without a track record to speak of, many companies are finding it a challenging market to raise new commitments from LPs, Stanford said.

European VC market

In Europe, the value of VC deals showed a slight decrease, while the number of deals fell by almost 16% compared to last year, said Pitchbook analyst Nalin Patel, as a more cautious environment shown in 2024.

Deal activity in Europe has decreased in earlier stages of financing, most verticals, and many regions as it sees a more difficult market for financing.

He said AI will drive more than a quarter of deal value in the region by 2024, at more than 23% of completed financings. The large, outsized deals due to other venture markets are not realized in the same amount in Europe, keeping the proportion of the deal value in line with the count.

And he said that the exit value increased in 2024, which was largely driven by the Puif list. It has otherwise been a quiet year for European VC-backed exits, especially on the front lists as companies shy away from exits.

“We expect exits to pick up in 2025 as market conditions improve,” Patel said.

Capital raised by European-based VC funds was flat YoY in 2024 and remains below the peak set for 2022. Fund numbers also declined in 2024, declining by approximately a fifth compared to 2023. The lower number of funds and the flat capital raised numbers indicate that smaller, but larger funds closed in 2024.

The view?

One way to see how much dry powder the industry has and whether VCs are succeeding on their own is to see how well they’ve done raising money on their own. That’s where the news looks a little bleak, or at least corrected now compared to the overhyped days of 2021.

In 2024, 1,344 funds raised capital, up from 2,333 in 2023 and a record 4,283 in 2021. In terms of capital raised, 1,344 VCs raised $169.7 billion in 2024, up from $213.8 billion in 2023. and down from a record $4023 and down from a record $4023. .