- Global VC investment drops from $95.5 billion to $70.1 billion quarter-over-quarter
- AI accounts for six of ten largest VC deals globally in Q3’24
Global VC investment fell from a five-quarter high of $95.5 billion in Q2’24 to a nearly seven-year low of $70.1 billion 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, 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 $58.6 billion in Q2’24 to $41.4 billion in Q3’24. In Asia, VC investment fell from $18.5 billion to $15.6 billion quarter-over-quarter, while in Europe it dropped from $17.9 billion to $12.5 billion.
“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 billion in Q2’24 to $70.1 billion in Q3’24; the number of VC deals dropped from 9,270 to 7,227 over the same period.
• Global corporate VC investment fell from $54 billion to $35.2 billion between Q2’24 and Q3’24; this included declines from $34.4 billion to $19.6 billion in the Americas—including from $32.7 to $17.8 billion in the US—from $10.7 to $9.4 billion in Asia, and from $8.5 billion to $5.9 billion in Europe.
• Global exit value dropped from $52.9 billion in Q2’24 to $39.2 billion in Q3’24.
• Exit activity in Asia rose from $11.2 billion to $18.2 billion quarter-over-quarter, while it fell from $25.4 billion to $11.2 billion in the Americas, and from $16.3 billion to $9.8 billion in Europe.
• Global fundraising activity was well off the pace needed to match even 2023’s subdued total of $202.8 billion; at the end of Q3’24, global fundraising stood at $143.1 billion.
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. While core AI firms continued to attract VC investments during Q3’24, 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.
Key highlights from India
• India bucks global trend with significant raises by consumer-focused businesses.
- Despite a decline in Q3’24, VC investment in India remained solid at $3.6 billion, helped by a number of raises by consumer-focused businesses.
• The large raises by B2C businesses in India was an incredibly unique trend, the opposite of trends seen in most other jurisdictions in Asia and in other regions of the world — where B2B companies attracted the greatest levels of VC investment.
• While fintech businesses continued to attract a lot of attention in India, VC investors in the space have become more cautious in recent quarters as traditional banks have increasingly introduced their own fintech products aimed at the large unbanked and underbanked segments of the population.
• In India, there is very strong optimism that the VC market is recovering and that the next few quarters could see the level of VC investment really start to climb.
Commenting on India findings, Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India said, ‘As expected, there has been a bounce back in activity which is led by consumer focussed consumption sectors. This trend is expected to continue, and investors will back businesses which align with two key themes – path to profitability and / or strong growth trajectory with high level of customer engagement. This coupled with robust capital markets is what is driving this renewed VC interest’.
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.
