In Q1 of 24 there were 7,520 deals totaling $75.9 billion, down from 8,3.8 billion over 9,458 deals in Q4 of 23 due to geopolitical tensions, a prolonged period of low exits from VC-backed firms, and a persistent reduction in investment at later stages of agreements.
According to the Q1'24 edition of KPMG Private Enterprise's Venture Pulse, a quarterly report that sheds light on VC investment trends globally across key jurisdictions around the world, the level of VC investment was the lowest since Q2'19, and the number of VC deals was the lowest since Q2'16. During the quarter, China witnessed two megadeals worth over $1 billion.
This quarter, VC investment increased in Europe but decreased in the Americas and Asia. With the U.S. accounting for the great bulk of this sum ($36.6 billion across 2,882 transactions), the Americas accounted for over half of worldwide venture capital financing in Q1'24 ($38.2 billion across 3,205 deals). In the meanwhile, 2,305 agreements worth of $18.9 billion were made in Asia-Pacific, and 1,798 deals worth of $17.9 billion were made in Europe. Global exit activity, which decreased from $49.8 billion in Q4'23 to $30.7 billion in Q1'24—the lowest amount since Q4'16—remains subdued, however.
Conor Moore, Global Head, KPMG Private Enterprise, KPMG International, stated, "It's no surprise VC investors are being very conservative in their deal-making right now given how dry the exit environment has been for the last eighteen months."
VC investors, corporate investors included, are definitely pulling down on their spending, especially in the later phases of deals. According to Moore, the only true exceptions to the rule at the moment are businesses that are primarily focused on cleantech or AI. As these businesses attempt to manage their AI-driven cyber risk, cybersecurity may soon follow suit.
The following are a few of the report's main highlights:
Eight out of the ten largest agreements in the world in Q1'24 were from the cleantech and AI industries.
Regarding the worldwide VC investment decline, cleantech and artificial intelligence (AI) emerged as the outliers, drawing significant investment in Q1 of 24. Eight of the 10 largest agreements in the world this quarter were made by the two industries together.
Of the $36.4 billion in venture capital investment made in the Americas in Q3'23, $32.7 billion came from the USA.
With approximately $38.2 billion invested across 3,205 deals in Q1'24, VC investment in the Americas reached its lowest point since Q4'19. The great bulk of this total—$36.6 billion across 2,882 transactions—was accounted for by the United States. In the Americas, biotech and health were major winners in addition to AI and cleantech.
VC funding from outside the United States was extremely low in Q1 of 24. Between Q4 of 23 and Q1 of 24, venture capital investment in Canada fell to a 22-quarter low of $766 million. VC investment is increasing in Europe as a result of the H2 Green Steel megadeal.
This quarter, venture capital investment increased solely in Europe, from $15.1 billion in Q4'23 to $17.9 billion in Q1'24. However, at the same period, the number of deals fell from 2,419 to 1,798.
From a jurisdictional perspective, venture capital investment surged in the Nordic area and France, reaching $6.3 billion and $2.3 billion, respectively, while it declined in the United Kingdom and Germany, reaching $3 billion and $1.8 billion, respectively.
