Q1 2024 PitchBook-NVCA Venture Monitor

Q1 2024
Sponsored by
The definitive review of the US venture capital ecosystem

Sponsored by
PitchBook Data, Inc.

JOHN GABBERT Founder, CEO
NIZAR TARHUNI Vice President, Institutional Research and Editorial
DYLAN COX, CFA Head of Private Markets Research
Analysis
KYLE STANFORD, CAIA Lead Analyst, Venture Capital
MAX NAVAS Analyst, Venture Capital
KAIDI GAO Analyst, Venture Capital
pbinstitutionalresearch@pitchbook.com
Data
COLLIN ANDERSON Data Analyst
Publishing
Contents
Report & cover design by JOEY SCHAFFER, MEGAN WOODARD, and
CHLOE LADWIG
National Venture Capital Association (NVCA)

BOBBY FRANKLIN President & CEO
SHILOH TILLEMANN-DICK Research Director
ROBIN CEPPOS Communications Manager
Executive summary 3
NVCA policy highlights 4 Contact NVCA
nvca.org
Market overview 6 nvca@nvca.org
Dealmaking 9 J.P. Morgan Commercial Banking

MELISSA SMITH Co-Head of Innovation Economy and Head of
A word from J.P. Morgan 15 Specialized Industries
JOHN CHINA Co-Head of Innovation Economy
Regional spotlight 17
PAMELA ALDSWORTH Head of Venture Capital Coverage
Fintech 19 GINGER CHAMBLESS Head of Research
Gaming 21 Contact J.P. Morgan

jpmorgan.com/innovationeconomy
Female founders 23
Dentons Global Venture Technology and Emerging
A word from Dentons 25 Growth Companies Group
VICTOR H. BOYAJIAN Global Chair
Investor trends 27
Venture debt 30 Contact Dentons
dentonsventurebeyond.com
A word from Deloitte 32 victor.boyajian@dentons.com
Exits 34 Deloitte & Touche LLP Audit & Assurance

HEATHER GATES Private Growth Leader
Fundraising and performance 38
Contact Deloitte
Q1 2024 US league tables 43
hgates@deloitte.com
Methodology 44
2
PITCHBOOK-NVCA VENTURE MONITOR
Sponsored by
Executive summary
The first quarter of 2024 did not start Furthermore, insider-led rounds are followed the two biggest years in the
on a high note for the US venture capital currently more common than they have history of venture capital, it would
community. There is usually a bit of been in years, and first-time financings have been viewed as an exceptionally
a seasonal rise that accompanies Q1, are at multiyear lows. Finally, pre-seed/ strong year, coming in just 4.2% below
but with $36.6 billion invested across seed rounds are at their lowest relative 2020’s total activity. Anecdotally,
3,925 deals, Q1 deal activity remained share than at any time in the last 10 years, 2024 is not expected to break records
relatively on pace with the past year. and later rounds are up commensurately. for investment activity, but there is
However, it would be a mistake to Investors seem to be circling their tremendous potential roiling beneath
hyperfocus on the results of a single wagons and making sure their most the surface of a relatively calm market.
quarter whose results were a bit farther promising companies are positioned for Between an increasing number of
left on the bell curve than usual. The success before they make new bets. mature portfolio companies and
venture capital (VC) business cycle exceptional levels of dry powder, the
effectively reset in recent years, and While technologies like AI and next- market is not lacking in possibilities for
as of early 2024, it still appears to be generation computing present a variety exit or investment, but the sparks that
searching for its level. of opportunities, several regulatory reignite the market will probably be
issues are making it harder for America’s visible only in hindsight.
Despite low capital outflows, venture innovators to operate effectively.
capital did not enter 2024 with a lack The White House is proposing a new On the positive side, some parts of
of capacity. Years of strong fundraising march-in framework under the Bayh- the market have already moved from
combined with low levels of investment Dole Act that would greatly expand the anticipation to action. Capital calls are
in recent quarters mean that the sector government’s ability to seize intellectual reportedly up in Q1, and the year has
is sitting on well over $300 billion in property (IP) developed with any federal already seen some notable exits. Less
dry powder. This relative abundance support. If implemented, this would positively, some proposed government
of capital contrasts sharply with the make many of America’s finest research actions would force founders and
lack of investment over Q1, but it is institutions off-limits to the private investors to spend more time on
best viewed in the context of dramatic sector and effectively negate many of paperwork and less time building the
shifts to the geopolitical, regulatory, the government’s recent investments industries of tomorrow. It is too early to
and macroeconomic environments in technology commercialization. tell where 2024 is going, but the game is
going back to the windfall years of 2021 Additionally, the congressional logjam on, and America’s VCs are ready for it.
and 2022. Those changes have been preventing the modernization of the In 2022, our world changed; in 2023, we
extensively documented in prior editions research & development (R&D) tax accepted it was not changing back; and
of this report. However, this edition credit is an unforced error that is in 2024, we are building what is next.
better contextualizes the market’s reducing America’s ability to compete
current defensive climate. in high-tech industries. Currently stuck Bobby Franklin
in the Senate, the proposed legislation President & CEO
A defensive investment climate is would enable companies to deduct NVCA
distinguished by investors’ reduction research expenses over a single year Bobby Franklin is the
in activity and focus on their existing rather than requiring amortization President & CEO of
portfolios in the face of relative over periods better suited for mature NVCA, the venture
abundance of demand and opportunities businesses. If passed, this bill would community’s trade
for new investments. This contrasts allow R&D-intensive businesses to association focused on
with a slow market, wherein demand focus on bringing innovations to empowering the next generation of transformative
US-based companies. Based in Washington, DC,
for capital is minimal. In Q1, the capital market, rather than spending money on
with an office in San Francisco, NVCA acts as the
demand/supply ratio hit an average of administrative overhead.
voice of the US VC and startup community by
nearly 2.0x across all stages, with the
advocating for public policy that supports the US
venture-growth ratio peaking at 2.2, Even a good harvest pales in comparison
entrepreneurial ecosystem.
its highest level in at least a decade. to a windfall, and if 2023 had not
3
NVCA policy highlights
Introduction in the Senate due to the expansion of the child tax (AML/CFT) compliance obligations on Securities
Capitol Hill is off to a rocky start in 2024, with credit and associated “pay-fors” in the package. On and Exchange Commission (SEC)-registered
lawmakers racing against multiple government February 28, Senate Finance Committee ranking investment advisers (RIAs) and exempt reporting
funding deadlines and bipartisan agreement member Mike Crapo (R-ID) released a statement advisors (ERAs) pursuant to the Bank Secrecy Act
proving elusive with the 2024 election opposing the package in its current form. (BSA). If implemented, advisors would have 12
approaching. Nonetheless, federal agencies months to comply with the new requirements after
advanced a series of rulemakings impacting Despite opposition from Republican senators, the final rule goes into effect.
the venture ecosystem. This page provides an Majority Leader Chuck Schumer may bring the bill
overview of NVCA’s current policy priorities and to the Senate floor for a vote in early April. If the NVCA is developing a comment on behalf of
their states of play. legislation can clear the Senate, it will be sent to the VC community to submit before the April
the president’s desk and signed into law. We are 15, 2024, deadline. In addition, we are meeting
March-in rights urging venture investors and startups to utilize with congressional and agency staff to convey
In late 2023, the US Department of Health & Human our R&D Advocacy Toolkit to urge the Senate to the negative impact of this rule. We are
Services and Department of Commerce announced pass the bipartisan tax package, The Tax Relief anticipating two further rulemakings covering
of a whole-of-government plan to review federal for American Families and Workers Act of 2024 a potential Customer Identification Program
march-in authority under the Bayh-Dole Act. (H.R.7024). and a rule concerning beneficial ownership
This draft framework would effectively expand information collection.
“march-in rights” to almost any IP developed with AI update
federal government support. NVCA has advocated Policymakers remain in the early stages of Key components of FinCEN’s proposal include:
strongly for the value of the private sector in grappling with the implications of the rapidly
supporting the commercialization of IP developed evolving AI landscape. NVCA has launched an • Requiring RIAs and ERAs to implement an AML/
with federal support. Actions have included: AI Working Group focused on regulatory and CFT program and file certain reports, such as
responding to the National Institute of Standards legislative issues critical to the future of this Suspicious Activity Reports, with FinCEN.
and Technology’s (NIST’s) Request for Information technology area. The Working Group will inform
(RFI), sending a letter voicing strong opposition NVCA’s policy agenda regarding AI issues to ensure • Keeping records relating to the transmittal
to the proposed framework to the White House, that the voice of the startup ecosystem is heard of funds—for example, complying with the
meeting with executive and legislative staff, in upcoming debates on Capitol Hill and federal Recordkeeping and Travel Rule.
speaking at congressional events, and engaging agency rulemakings. Further, the Working Group
with a multistakeholder coalition to educate will serve as a forum to discuss major issues in • Fulfilling other obligations applicable to
the public on the potential negative impact this AI policy and how they impact startup business financial institutions subject to the BSA and
proposal would have on the venture ecosystem. activity, coordinate federal strategy, and organize FinCEN’s implementing regulations.
potential outreach campaigns.
Since the release of the framework, about • Applying information-sharing provisions
40 members of Congress have engaged the NVCA has also launched a landing page to serve between FinCEN, law enforcement government
administration through letters or meetings to as a centralized hub of information on AI, offering agencies, and certain financial institutions to
voice their concern about potential impacts of this resources to help venture investors and portfolio investment advisors, along with subjecting
ham-fisted regulatory overreach. companies stay informed about the latest policy investment advisors to the “special measures”
developments from Congress, the White House, imposed by FinCEN pursuant to Section 311 of
R&D credit and the private sector. the Patriot Act.
Earlier this year, the House of Representatives
passed a strong bipartisan tax package that would FinCEN’s Anti-Money Laundering Rule • FinCEN would delegate its examination
allow startups to immediately deduct rather than On February 15, 2024, the US Department of authority to the SEC consistent with FinCEN’s
amortize domestic R&D costs over five years. the Treasury’s Financial Crimes Enforcement existing delegation to the SEC of the authority
NVCA has been committed to efforts to restore Network (FinCEN) published a notice of proposed to examine brokers and dealers in securities and
immediate deductibility of domestic R&D costs. rulemaking that would impose anti-money mutual funds for compliance with the BSA and
Unfortunately, the package faces an uphill climb laundering/countering the financing of terrorism FinCEN’s implementing regulation.
4
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Market overview
The US venture market has reached peak investor friendly
VC Dealmaking Indicator by quarter
100
Investor friendly
90
80
70
60
50
Startup friendly
40
30
20
10
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2019 2020 2021 2022 2023 2024*

Early-Stage Index Late-Stage Index Venture-Growth-Stage Index
PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
Market slowdown Late stage still showing largest gap in capital availability
VC capital demand/supply ratio by quarter
The venture market slowdown has not
3.0x
shifted significantly over the past few
quarters. The beginning of 2024 was 2.5x
met with some residual optimism, but
that did not translate into meaningful 2.0x
growth in activity. Market headwinds
1.5x
continue to enforce their will on financial
markets. Inflation within the US has 1.0x
been sticky in its last-mile descent to
0.5x
the Federal Reserve’s (Fed’s) 2% target.
Consumer Price Index (CPI) figures rose 0.0x
during January and February (March Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
figures have not been reported as of
2019 2020 2021 2022 2023 2024*
writing), with the 12-month consumer
price increase hitting 3.2%. With that Early-Stage Index Late-Stage Index Venture-Growth-Stage Index
data, it has become increasingly unlikely PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
that rates cuts will occur during the first

half of the year, which should continue how quickly the venture market Investors have increasingly added
the pressure on public markets and VC- swung into investor favor and how downside protective terms, such as
backed initial public offerings (IPOs). strong the market has been in its lean cumulative dividends and liquidity
toward investors. We have noted the multiples into term sheets, enabled by
Overall, venture continued in Q1 as an increase in down rounds during recent the lower investor competition and the
incredibly investor-friendly market. quarters, but share price has not been increased competition on the company
Our Dealmaking Indicator highlights the only compromise by founders. demand side.
6
Sponsored by
The US VC-backed company count Company inventory continues to grow

now sits above 55,000 companies— VC-backed company count by stage (smoothed)
with late-stage and venture-growth-
60,000 Venture growth
stage figures doubling since 2018—
highlighting competition for capital in Late-stage VC
50,000
a market two years into a slowdown. Early-stage VC
In contrast to the manic market of
40,000 Pre-seed/seed
2021, investors now have more choice.
Benchmarks for deals have increased, 30,000
and stronger companies are able to
compel investment, while struggling 20,000
companies are likely facing final
judgment. With expectations of a 10,000
recession fading, a soft landing likely
would not suddenly increase the supply 0
of capital, but it could provide a healthy
2014
2015
2016
2017
2018
2019
2021
2020
2022
2023
2024*
market for platform add-ons and small-
market mergers & acquisitions (M&A) to PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
consolidate sectors and talent.
Public multiple expansion benefits potential IPOs

Exacerbating the problem of high
VC-Backed IPO Index price/sales multiple
company count is the lack of capital on
the supply side. The venture-growth- 25x
stage capital demand/supply index
jumped to 2.2x, highlighting the chasm 20x
between company needs and investor
willingness to invest. Volatility in the
15x
model highlights either individual large
investment bias or the opposite, a lack
of outlier investments in the market. 10x
This quarter shows the latter. During Q1,
megadeals (rounds that are at or above
5x
$100 million) totaled $17.2 billion, which
2011-2013 2014-2016 2017-2019 2020-2021 2022-YTD
is roughly $40 billion less than the Q4 median: 7.7x median: 4.6x median: 6.3x median: 12.3x median: 5.1x
2021 high. 0x
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Until market factors push crossover PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
funds back into venture, a large capital
availability void will remain. There is the S&P and NASDAQ since the ill-suited for risk-averse markets.
little reason to foresee this occurring slowdown began, and it remains down Instacart’s stock has increased above its
anytime soon, with IPO activity more than 40% since the beginning of IPO price, but Klaviyo has fallen below by
remaining low, and cost of capital 2022, though the rebound seen during roughly the same amount. New public
remaining high. that past few quarters has closed market tech entrants Reddit and Astera
the gap that has opened over the Labs had strong debuts—and have held
Public market performance past couple years. This highlights the or pushed further their first day pops.
riskiness that VC-backed companies This is a positive sign for IPOs, and points
While the S&P was positive across the present to the market. A large majority toward more risk appetite in the market,
quarter, the performance of our VC- that have gone public have done so with but there remains a gap between buyers
Backed IPO Index was less than stellar. high losses. The premium on growth and sellers due to the valuations in the
The index has severely underperformed that VCs place leaves these companies venture market a couple years ago.
7
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IPO Index falls back in line with S&P 500

Quarterly VC-backed IPO Index and DeSPAC Index values versus S&P 500 (rebased to 100 in 2019)
400
350
300
250
208.6
200
150 155.1
100
50 14.3
0
2019 2020 2021 2022 2023 2024*
VC-Backed IPO Index DeSPAC Index S&P 500
Due to the headwinds still present,

it has become more necessary for
companies to move significantly
toward profitability while maintaining
growth. Each of the unicorns that have
gone through an IPO over the past few
quarters has shifted toward EBITDA
positive, or has generated a net profit
in the quarters leading up to their
listing. With recession fears fading,
though still around, showing growth
and a movement toward profit can
keep investors engaged with the story
of a company’s future growth. Overall,
VC-backed companies have not created
nearly as much value post-IPO over the
past couple years than they did in the
years prior.
8
Sponsored by
Dealmaking
Quarterly deal value lowest since 2018
VC deal activity by quarter
$100 6,000
$90
$80 5,000
$70 4,000
$60
$50 3,000
$40
$30 2,000
$20 1,000
$10
$0 0
2019 2020 2021 2022 2023 2024*
Deal value ($B) Deal count Estimated deal count
Continued slowness in Deal activity off to slow start

dealmaking in Q1 VC deal activity
In Q1, the pace of dealmaking continued 19,078

17,709
to slow. Deal value dipped QoQ but
15,580
was roughly the same as Q3 2023. At 13,759
the late and venture-growth stages, 13,652
12,598
11,881 11,871
where a significant portion of large deals 11,171 11,015
historically takes place, there has been
3,925
an uptick in capital supply shortage. Our
$36.6
capital demand/supply model indicates
that as of Q1 2024, for every $2.20
$349.5
$165.8
$145.9
$241.6
needed by venture-backed startups at

$151.5
$173.1
$86.6
$90.6
$83.5
$74.3
the venture-growth stage, only $1.00 is

being provided from the investor side.
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
The sluggish dealmaking pace has Deal value ($B) Deal count Estimated deal count
trickled down across the venture PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
lifecycle, and nascent startups were

not immune from the headwinds. The increase, notching $10.2 billion in Q1. value has taken a free fall in Q1, landing
quarterly first-time financing deal value Like their nascent counterparts, mature at $4.7 billion.
settled at $3.1 billion in Q1, roughly on startups faced the sobering reality of a
par with the pre-pandemic level. During capital-availability crunch. At the late In a highly investor-friendly
the same quarter, $2.6 billion was stage, deal value rose steadily over the environment, VCs can and have become
deployed at the pre-seed/seed stage, past four quarters, although the Q1 highly selective with deals. Some
where quarterly deal value slumped by 2024 figure fell below the level from the commit only to companies that profile
39.0% compared to Q1 2023. Deal value same quarter a year ago by 17.0%. At perfectly for their investment strategies.
at the early stage surfaced a slight QoQ the venture-growth stage, quarterly deal Strong companies with solid technology,
9
Sponsored by
healthy financials, and proven metrics Early stage running into roadblocks
for future growth have more negotiating Early-stage VC deal activity by quarter
power if multiple groups of investors
$30 1,800
are competing for a space on the cap
table. However, in many cases where the 1,600
$25
investors are trying to fill a syndicate, 1,400
founders likely face the predicament $20 1,200
of aggressive terms that try to lock 1,000
$15
in a return multiple. With syndicate 800
formation, having investors with $10 600
varying capacities—for example, small 400
$5
funds that are tapped out versus large 200
players sitting on a pile of uncalled LP $0 0
commitments—and expected timelines Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
for exits creates different tensions and
2019 2020 2021 2022 2023 2024*
motivations. The dynamic is particularly
pronounced in a liquidity draught. Deal value ($B) Deal count Estimated deal count
Amid a harsh fundraising climate,

companies that are struggling to hit
Early stage remains under pressure
the next inflection point have realized
Share of early-stage VC deal value by size bucket
that they may not be able to raise a
subsequent round or bridge financing. 100% $25M+
VCs might opt to find a home for those 90% $10M-$25M
subpar assets, such as by winding them 80%
$5M-$10M
down or making an exit via a strategic
70%
acquisition. Those processes take time $1M-$5M
60%
to materialize and can become a drag
50% $500K-$1M
on dealmaking momentum. Similarly,
it typically takes a few months for 40% Under $500K
investors to return from the holiday 30%
season, reconnect, and fill a pipeline of
20%
deals all the way to close.
10%
The nascent stages stumble 0%

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
In Q1, we observed a significant drop PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
in deal count and value at the pre-seed
and seed stages. The sharp decline when it comes to cost reduction. Hitting performing portfolio companies or
contrasts with trends from recent the next inflection point is a particularly invest in the highest-quality companies
quarters, wherein pre-seed and seed challenging mission while trying to that have demonstrated traction and
activity held up relatively robustly. maintain capital efficiency. product-market fit. This wariness has
Related to the point we made earlier, also translated into an increase in
earlier-stage companies that have been In line with what we saw across the extension rounds.
stuck in a standstill between pre-seed venture lifecycle, investors have
and seed or between seed and Series become cautious and selective when An ongoing challenge faced by earlier-
A may not be able to achieve the next doing deals, and the bar has gone up. stage companies, particularly those
milestone. A focus on lean operations Regardless of the ways in which VCs located outside of the largest four
adds to challenges for businesses to diligence deals, the criteria has become ecosystems in the US—the Bay Area,
balance growth and cost reduction. more stringent, and investors prefer Los Angeles, New York, and Boston—is
Nascent companies have fewer options to either double down on the best- characterized by heightened reservation
10
Sponsored by
from smaller funds. With smaller AUM, Valuations get boost in Q1

those funds naturally have limited Median VC pre-money valuation ($M) by stage
reserves for follow-on rounds. Those
$400
funds might be tapped out when their
portfolio companies raise a subsequent $350
financing round, when new investors
$300
look for continued support from
insiders as a sign of commitment and $250
$229.3
confidence, thus leading to a feeling $200
of uncertainty around the ability to
$150 $144.0
successfully build a syndicate for a
future round. $100
$50.0
$36.0 $70.1
$50 $46.5
$11.7
The way that VCs advise their early- $5.7 $12.0
$0 $7.5
stage portfolio companies has shifted
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
from a few years ago but has been
largely the same over the past couple of Pre-seed Seed Early-stage VC Late-stage VC Venture growth
quarters. Overall, investors scrutinize PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
the cost structure and focus on

building solid business fundamentals.
Deal sizes flat
For nascent software companies,
Median VC deal value ($M) by stage
VCs emphasize the importance of
capital efficiency and value creation, $35
where a company is projected to be $30
able to control their own destiny if
they can hit cash flow break-even or $25
achieve profitability.
$20
Slight valuation uptick $15

$13.8
due to a different camp of
$10 $6.1
companies raising $5.7
$5.5
$5 $4.4 $4.8
On a positive note, the median $3.0 $3.1
$0 $0.6 $0.9
pre-money valuation for venture-
backed startups surfaced an upward 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
trajectory from the 2023 annual level Pre-seed Seed Early-stage VC Late-stage VC Venture growth
across the venture lifecycle, despite PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
the overarching slowdown in deal
momentum. The increase is most success in securing equity financing in projections. During Q1, some investors
pronounced at the venture-growth a challenging environment. Valuation indicated that they saw a different set of
stage, where the median valuation trends from 2023 reflect a significant companies doing “authentic raises.” By
figure ascended from $144.0 million correction across the venture lifecycle, demonstrating organic growth metrics,
to $229.3 million, denoting a hefty aside from seed. Many of those those startups managed to maintain or
59.2% expansion. companies experienced the pain of expand the price of the last round and
a valuation drop as market reverted have thus been able to gain traction
Delving into the data, we see that toward postpandemic normalcy; some from investors.
the promising trend has the caveat had to raise in a challenging climate
of a survivorship bias. The median before they could adjust their business
valuation climbed likely because only operations to deliver more promising
high-quality companies are finding and compelling cash flow and growth
11
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Life sciences1 the healthcare space experienced of the inherent risks associated with
several challenges that led to heightened pursuing innovative therapies and a
In line with trends from the broader investor caution, a flight to quality lack of viable paths to profitability—
venture ecosystem, we observed a (in the form of proven metrics), and a even though the highly successful ones
slowdown in healthcare dealmaking decline in VC deal and exit momentum could become blockbusters with new
during the past two years, following the throughout 2023. drug discovery—has led to a shrinking
pandemic-fueled capital exuberance. investor appetite when the cost of
Yet the healthcare sector differentiates Within healthcare, biopharma capital has gone up across the board. As
itself from the rest of the market by businesses may not fit the playbook of our Q4 2023 Biopharma Report pointed
demonstrating many unmet needs how VCs typically de-risk deals. During out, biotech investment trends have
that could have a profound impact on periods of market stress, investors surfaced a flight to quality, wherein
society, particularly around disease revert to business fundamentals and investors prefer writing checks to fewer
diagnosis and treatment. On top of the focus on helping portfolio companies startups with mature clinical data.
immense opportunity set for disruption cut spending and get on track to
within healthcare, investor enthusiasm cash flow break-even or profitability. Companies operating in select
around AI adoption in drug development However, many biopharma startups subsectors of healthcare have also
further speaks to the demand for are pre-revenue and need to burn a encountered headwinds as their main
better solutions in biotech through significant amount of capital while buyers struggled through the pandemic.
groundbreaking innovations. making advances clinically. Biopharma For example, the medtech sector often
startups have a high-risk profile as they sells into a hospital environment. Since
Compared to their tech counterparts, go through the rigorous and expensive the onset of the pandemic, hospitals
healthcare companies did not journey of clinical trials. A high level of went through a series of challenges
experience as significant of a valuation uncertainty around getting approved with staffing and their balance sheets.
blip amid the 2021 market frenzy. As a by regulatory bodies further adds to the Struggles from a buyer standpoint signal
result, the sector has not been subjected risk of potential losses from an investor additional hurdles for medtech startups.
to the same level of price correction return standpoint. For early-stage
during the ensuing period.2 Nonetheless, biopharma startups, the combination
Life sciences sees lowest deal count in years

Life sciences VC deal activity by quarter
$16 800
$14 700
$12 600
$10 500
$8 400
$6 300
$4 200
$2 100
$0 0
2019 2020 2021 2022 2023 2024*
Deal value ($B) Total deal count
Pre-seed/seed deal count Early-stage VC deal count Late-stage VC deal count Venture-growth deal count
1: In the Venture Monitor report, the life sciences dataset includes the life sciences vertical as well as the industries of pharma & biotech and healthcare devices & supplies. Note that healthcare services & systems is not included in
how we define “life sciences.” A “life science”-tagged company could have multiple industry tags such as healthcare devices & supplies and pharma & biotech.
2: There might be a data bias from companies under-reporting for down rounds or insider-led deals.
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Enterprise SaaS 2022 to improve margins. In 2023, about dual- or repeated-use software likely
1,200 tech companies laid off more than points to future success of large
Corporate software spending is 260,000 employees in aggregate. 3 Such platforms. Given how corporations
susceptible to changes in broader cost-reduction measures have meant have generally tightened their belts
market sentiment, as discussed in our fewer seats from an enterprise software for software purchases, it is difficult
Q4 2023 Launch Report: Enterprise end-user standpoint. Corporate buyers for internal stakeholders to pitch for
SaaS. With tempered optimism for have also become more uncertain over budget allocated to buy an additional
revenue outlooks and a softened pace the past two years. We saw a softening software package that offers a better
of growth, businesses across the board of corporate investments in certain version of what the business has already
have become more cautious with types of enterprise applications such spent money on. In this case, either
budgeting. This pattern is evident in as enterprise resource planning (ERP) corporate end users will have to wait
corporations being highly selective and knowledge management systems until the next budget cycle to get a more
with software purchases and license (KMS). On the other hand, during times cost-effective software, or decision-
renewals. Meanwhile, the promise of AI of economic strain, the drive toward makers lean toward signing on a large
has become a disruptive force within the efficiency is much more pronounced, platform—Microsoft being a prime
enterprise software-as-a-service (SaaS) thereby encouraging greater adoption of example—that offers a suite of products
landscape. Well-established, large automated systems. Some companies under the same brand. Despite this
enterprises have been carefully weighing might opt to double down on software seemingly inexorable trend, the market
their options between aggressive cost- that leverages the next-generation or remains frothy as the biggest potential
cutting by using legacy applications or on-the-horizon technology to boost spoiler is the aggressive adoption and
betting on the revolutionary prospect productivity in the long term versus implementation of new and disruptive AI
of AI by experimenting with the taking the more expensive approach offerings. Despite potential hurdles from
latest technology. of growing headcounts or sticking financial and regulatory standpoints,
to existing suites that are lower cost corporations—including top incumbents
Over the past couple of quarters, and standardized. themselves—are keen to invest in
the enterprise SaaS universe has developing and integrating generative AI
experienced bifurcated drivers of buyer A combination of budget constraints (GenAI) capabilities to capture the next
appetite. On one hand, tech companies and corporations’ inclination to shy wave of digital transformation.
have conducted a series of layoffs since away from placing large bets on
Just $20 billion invested in tech during Q1

Tech VC deal activity by quarter
$90 5,000
$80 4,500
$70 4,000
$60 3,500
3,000
$50
2,500
$40
2,000
$30 1,500
$20 1,000
$10 500
$0 0
2019 2020 2021 2022 2023 2024*
Deal value ($B) Total deal count
Pre-seed/seed deal count Early-stage VC deal count Late-stage VC deal count Venture-growth deal count
3: “Companies w/ Layoffs,” Layoffs.fyi, April 4, 2024.
13
Sponsored by
Thus, we believe three sets of startups retention (NRR), and loan/value ratio applications benefits from the tailwind
are well positioned to continue growing (LTV) to customer acquisition cost of strong unmet demand from financial
and take up market share from top (CAC) ratio—and executing on a plan institutions with legacy systems that
incumbents such as SAP, Microsoft, for market domination, businesses struggle to keep up with the fast pace
and Oracle. The first set is comprised that have cracked the code for the of tech advancement. However, a core
of nimble, fast-moving, pure-play trade-off between growth and burn reason for the slow adoption of the latest
companies that can adopt, leverage, are well positioned to become the technology for financial institutions is
and apply AI to their core products next generation of market leaders. the fear that GenAI’s inaccuracy could
where it makes the most sense. Despite In addition, businesses that help lead to adverse impacts on consumers,
their sheer market dominance, industry enterprises with expense monitoring with major regulatory consequences for
incumbents will be in a vulnerable and management could play positively the financial institutions. AI is an agent
position if they cannot respond to the into the current downturn. An example of both the vendor that programmed
AI wave in a timely manner. The second is Zylo, a software spending reduction the language and the financial
group of future winners is characterized platform that helps enterprises map, institution that deploys it, versus
by disciplined, efficient growth. Those identify, and manage software licenses. being an independent decision-maker.
companies are close to reaching or Its unique business model enabled the Alongside the slow application of GenAI
have already reached cash flow break- company to capitalize on the overall (traditional AI & machine learning has
even, are mindful of managing burn, cost-cutting trend. been implemented in fintech for a long
and are also willing to double down time), enhanced regulations down the
on reinvestments that will allow them For fintech software, we expect to see road will shape the way the technology
to continue growing market share. By increased regulations for the subsector is implemented in a field that has
closely tracking essential analytics— regarding the development and historically been heavily regulated.
metrics such as net churn, net revenue integration of AI. The evolution of fintech
14
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A WORD FROM J.P. MORGAN

Our views on venture
Economic momentum, still-too-hot light relative to historical averages.
inflation, and strong labor markets Additionally, the profile of the recent Ginger Chambless
have persisted through the first part IPO cohort—scaled, profitable—looks Head of Research,
Commercial Banking
of 2024, leaving the Fed in no hurry very different than it did in 2021, leaving
to cut rates. Even so, there are some the sizable backlog of venture-backed Ginger Chambless
signs of spring in exit markets. companies aiming to IPO largely intact. is a Managing
Director and Head of
Research for JPMorgan
Since the beginning of the year, market The recovery of exit markets over
Chase Commercial
expectations have recalibrated to a the coming quarters will be key for
Banking. In this role, she produces curated thought
later and shallower path of Fed rate reigniting and normalizing activity
leadership content for commercial banking
cuts. Although the outlook for terminal earlier in the venture lifecycle. In clients and internal teams. Her content focuses on
real rates that underpin valuations the meantime, founders will need economic and market insights, industry trends, and
has ticked up only slightly, higher to continue to focus on the basics: the capital markets.
projected Treasury issuance to fund balance growth with profitability,
fiscal deficits, combined with declining manage cash burn, and be Additional contributors:
demand from price-insensitive buyers opportunistic in raising liquidity with Pamela Aldsworth
like central banks, could contribute to realistic valuation expectations. Head of Venture Capital Coverage
greater interest rate volatility over the Andy Kelly
medium term and a steeper yield curve. Amid the macroeconomic Managing Director, Venture Capital Coverage
crosscurrents and exit market green
Meanwhile, US election rhetoric shoots, the funding environment
is heating up and ongoing military for late-stage companies remains data indicates that convertible bridge
conflicts in Europe and the Middle challenged; the rate of down rounds rounds in early 2024 saw greater than
East keep near-term uncertainty and continues to rise. 25% of valuation caps below the last
geopolitical risks elevated. priced round valuation.6
The venture ecosystem has
Interestingly, history tells us that experienced a meaningful unwinding Within the tough funding environment,
past presidential elections do not since late 2021; we think we could be Dave Reich, Head of Innovation
appear to coincide with slowdowns in the latter innings of this process as Economy Debt Solutions at J.P. Morgan,
in capital markets or M&A activity. funding activity appears to be leveling notes that private credit is more
We are cautiously optimistic that the off around 2019 to 2020 levels and actively providing growth capital for
recent pickup in issuance and deal valuations are resetting lower. The later-stage scaled companies. Reich
volumes from low levels could build prevalence of down rounds and bridge counsels that companies should
throughout the year. down rounds continued to climb in consider the risks of this route of
the first few months of the year. In funding, or any form of debt, including
Regarding IPO activity, markets are Q4 2023, more than one in every five a clear understanding of the lender’s
generally tracking in line with our late-stage transactions was a down expectations for debt repayment.
expectations for a phased reopening. round, according to Aumni. 4, 5
This Further, if leverage is excessive, it could
First-quarter volumes mark a trend has also persisted in early-stage complicate future equity raises when
notable uptick from 2022 and 2023, transactions, where down rounds have the markets ultimately rebound.
even though levels overall remain climbed to nearly 9% of deals. Aumni
4: Aumni, a J.P. Morgan company, is a leading provider of investment analytics software to the venture capital industry.
5: “Aumni Venture Beacon: Year End 2023 Report,” Aumni, a J.P. Morgan Company, n.d., accessed March 24, 2024.
6: Ibid.
15
Sponsored by
Early-stage activity reflects cautious the startup’s offering is in market. intelligence gathering and the need
optimism on the part of investors. Factors that could hinder capital- for cybersecurity, especially in today’s
Seed valuations have been on an raising efforts today include a lack environment. This manager has backed
upward trend, though the range has of startup and industry experience, a cybersecurity startup that utilizes
widened, which speaks to greater an undifferentiated solution, or if the patented AI-powered, deception-
investor selectivity. technology is viewed as too early. based active monitoring to detect,
engage, and respond to malicious
According to Ashraf Hebela, Head of As venture markets have been broadly activity. Further, the manager has
Startup Banking at J.P. Morgan, the challenged over the past two years, leveraged their network to support
pace of seed deals and valuation trends emerging and diverse managers the company’s engagement with large
suggests the environment for startup continue to present a compelling defense firms to build out sales of
funding continues to lean investor- and differentiated approach to the product.
friendly compared to 2020 and 2021. the ecosystem.
Given this backdrop, it is critical that Another example in Spark’s portfolio is
founders be able to deliver a well- Jamie Kramer, Head of Alternative a venture fund managed by two female
formed plan that includes a product Solutions at J.P. Morgan Asset GPs. The fund focuses on AI to improve
road map, a financial model, and the Management, chairs the investment healthcare options, while ensuring
level of hiring required to get to break committee for Project Spark, an gender inclusivity and bias elimination.
even—all of which can help support a initiative that invests in diverse, Specifically, one company has
target valuation. emerging venture managers. She developed AI-enabled tools to forecast
notes that from 2020 to 2022, large and monitor health conditions.
The attribute early-stage investors institutions with embedded VC
value most in the current environment strategies made commitments to Diverse emerging managers can have
is the founder’s (and team’s) profile established manager peers versus access to differentiated deal flow
in terms of relevant experience. emerging managers at a ratio of that tends to be less crowded and
A strong leadership team with a 5:1. This has created an overlooked enables them to make meaningful
prior startup track record that is opportunity for differentiated alpha in investments with smaller check
pursuing a large market opportunity emerging managers. sizes. They often look to add value
is a favorable combination. Soft beyond capital through networks and
skills, such as resilience and being Kramer finds that diverse managers industry expertise.
stubbornly motivated to succeed, tend to be highly motivated and bring
are also important amid a turbulent a unique focus to solving problems
market. Other considerations are the within their own communities © 2024 JPMorgan Chase & Co. All rights reserved.
competitive landscape, as well as or ecosystems. For example, a JPMorgan Chase Bank, N.A. Member FDIC.
how much the technology has been veteran manager in Spark’s portfolio Visit jpmorgan.com/cb-disclaimer for full
de-risked, and how differentiated has firsthand knowledge about disclosures and disclaimers related to this content.
16
Sponsored by
Regional spotlight Deal count shift at

pre-seed/seed
Share of VC deal count by market breakout*
Deal value remains squarely
centered on hubs
Share of VC deal value by market breakout*
34.6% of deal count went to the Bay Area and NY

Q1 VC deal activity by ecosystem*
Venture growth 51.4% 48.6% Venture growth 76.9% 23.1%
Seattle
Deal count: 78
Deal value: $0.7B
Boston
Deal count: 179
Deal value: $3.2B Late-stage VC 47.8% 52.2% Late-stage VC 75.1% 24.9%
Philadelphia
Deal count: 114
Deal value: $0.9B New York
Deal count: 427
Bay Area Deal value: $4.4B
Deal count: 570 Denver Chicago
Deal value: $14.6B Deal count: 70 Deal count: 69
Deal value: $1.1B Deal value: $0.8B
Early-stage VC 54.8% 45.2% Early-stage VC 63.4% 36.6%
Los Angeles
Deal count: 215
Deal value: $2.1B
Austin
Deal count: 79 Pre-seed/seed 46.6% 53.4% Pre-seed/seed 58.8% 41.2%
Deal value: $0.7B
0% 50% 100% 0% 50% 100%

Miami
Bay Area, NY, LA, Boston Outside hub markets Bay Area, NY, LA, Boston Outside hub markets
Deal count: 94
Deal value: $0.6B PitchBook-NVCA Venture Monitor PitchBook-NVCA Venture Monitor
*As of March 31, 2024 *As of March 31, 2024
Miami New York Austin

Miami has demonstrated staying power in its VC Though the Bay Area remains the largest VC market Austin deal count has had a sluggish start the year,
activity. Prior to the pandemic, its market was well in the world, New York has developed into a strong with just 60 deals closed in Q1. That figure puts Austin
below the top 10 most active, but Miami doubled its runner-up, closing 75% of the number of deals that the at just 12.7% of its 2023 annual deal count, the lowest
deal count from 2019 to 2022. Its local fundraising and Bay Area did in Q1. $86.2 billion has been closed by New proportion of any of the top 10 markets. The closure of
the opening of investor offices in the market have kept York-based VC funds since the beginning of 2021, and Techstars’ Austin accelerator is another challenge to
Miami as the sixth-most-active VC market in the US. New York is the only ecosystem other than the Bay Area the market, and through Q1, Austin had just one fund
Through Q1, Miami closed nearly 100 deals. to close more than $1 billion so far in 2024. close to replenish local capital availability.
17
Innovation.
Acceleration.
Disruption.
Dentons Global Venture Technology
A top ranked boutique on
a global platform
Top 10 2023
VentureBeyond.
dentonsventurebeyond.com
© 2024 Dentons. Dentons is a global legal practice providing client services worldwide through its member firms and affiliates.
Please see dentons.com for Legal Notices.
Sponsored by
DEALS BY SECTOR
Fintech
Annualized deal value on track to exceed Late-stage and venture-growth startups
pre-pandemic level garnering a growing share
Fintech VC deal activity Share of fintech VC deal count by stage
4,361 100% Venture growth

4,112
3,706 90% Late-stage VC
3,083 80%
Early-stage VC
2,921 70%
Pre-seed/seed
60%
50%
40%
804
30%
20%
$40.7 $50.3 $114.5 $68.2 $63.8 $12.9
10%
2019 2020 2021 2022 2023 2024* 0%
Deal value ($B) Deal count 2019 2020 2021 2022 2023 2024*
PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024 PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
Median deal size ticks up, roughly on par Median pre-money valuations notched the
with 2021 figure highest level in our dataset
Median and average fintech VC deal values ($M) Median and average fintech VC pre-money valuations ($M)
$35 $400
$30 $350
$23.9 $23.1 $300 $262.4

$25 $257.2
$250
$20
$200
$15
$150
$10
$100
$4.9
$4.2
$5 $50 $30.0
$24.8
$0 $0
2019 2020 2021 2022 2023 2024* 2019 2020 2021 2022 2023 2024*
Median Average Median Average
Fintech sector data is provided as part of our Emerging Tech Research coverage. The full Retail Fintech Report can be accessed here.
The full Enterprise Fintech Report can be accessed here.
19
Sponsored by
Wealthtech taking the lead for venture Neobanks continue to see low levels
activity, followed by capital markets of funding compared to other fintech
Q1 2024 fintech VC deal activity by segment* subsectors
TTM fintech VC deal activity by segment*
$350 50 $2,500 180

$300 160
40 $2,000 140
$250
120
$200 30 $1,500 100
$150 20 $1,000 80
$100 60
10 $500 40
$50
20
$0 0 $0 0
Alternative
lending
Capital markets
Credit &
banking
Commercial
finance
Consumer
payments
CFO stack
Financial services
infrastructure
Payments
Regtech
Wealthtech
Alternative
lending
Capital markets
Credit &
banking
Commercial
finance
Consumer
payments
CFO stack
Financial services
infrastructure
Payments
Regtech
Wealthtech
Deal value ($M) Deal count Deal value ($M) Deal count
A large proportion of capital continues to Wealthtech, capital markets, and financial

be deployed to B2B startups services infrastructure deal counts surge
Fintech VC deal value ($M) by segment Fintech VC deal count by segment
$10,000 350
$9,000
300
$8,000
$7,000 250
$6,000
200
$5,000
150
$4,000
$3,000 100
$2,000
50
$1,000
$0 0
2019 2020 2021 2022 2023 2024* 2019 2020 2021 2022 2023 2024*
Alternative lending Capital markets Credit & banking Commercial finance Consumer payments
CFO stack Financial services infrastructure Payments Regtech Wealthtech
20
Sponsored by
DEALS BY SECTOR
Gaming
Annualized deal value in on par with pre- Early-stage deals leap forward in 2024
pandemic activity levels Share of gaming VC deal count by stage
Gaming VC deal activity
402 100% Venture growth

391
90% Late-stage VC
80%
Early-stage VC
235 240 70%
Pre-seed/seed
60%
200
50%
59 40%
$0.5 30%
20%
$2.2 $5.0 $9.1 $8.2 $2.2
10%
2019 2020 2021 2022 2023 2024* 0%
Deal value ($B) Deal count 2019 2020 2021 2022 2023 2024*
Median deal sizes are flat, a slight Median pre-money valuations slide in Q1
increase from 2020 Median and average gaming VC pre-money valuations ($M)
Median and average gaming VC deal values ($M)
$30 $600
$25 $500
$20 $400
$12.0
$15 $300
$11.5
$10 $200 $119.3
$119.0
$5.0 $5.0
$5 $100
$23.5 $13.3
$0 $0
2019 2020 2021 2022 2023 2024* 2019 2020 2021 2022 2023 2024*
Gaming sector data is provided as part of our Emerging Tech Research coverage. The full Gaming Report can be accessed here.
21
Sponsored by
Content leads in deal count, while Investors place more bets on content
development paces deal value developers in pursuit of the next hit title
Q1 2024 gaming VC deal activity by segment* TTM gaming VC deal activity by segment*
$300 35 $1,400 140
$250 30 $1,200 120

25 $1,000 100
$200
20 $800 80
$150
15 $600 60
$100
10 $400 40
$50 5 $200 20
$0 0 $0 0
Development
Operations
Access
Experience
Content
Development
Operations
Access
Experience
Content
Deal value ($M) Deal count Deal value ($M) Deal count
The chasm between content and Investors flock to the edges, bets near
development deal value narrows YoY binary on either content or B2B SaaS
Gaming VC deal value ($M) by segment Gaming VC deal count by segment
$7,000 250
$6,000
200
$5,000
$4,000 150
$3,000
100
$2,000
50
$1,000
$0 0
2019 2020 2021 2022 2023 2024* 2019 2020 2021 2022 2023 2024*
Development Operations Access Experience Content
22
Sponsored by
Female founders
Female founders’ dealmaking remains low All-female-founded company investment
VC deal activity in companies with at least one female founder below $1 billion
VC deal activity in companies with all-female founding teams
5,025 1,211
1,119
4,510
3,450 3,506 933
810
3,372
2,971 725
2,640 660
2,265 566
2,132 2,334 491 474
476
648 148
$9.9
$0.7
$44.4
$20.8
$25.8
$24.9
$10.9
$16.2
$12.6
$61.9
$10.1
$41.1
$2.4
$3.8
$5.2
$3.2
$3.5
$2.3
$3.3
$7.3
$1.7
$1.3
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Deal value ($B) Deal count Deal value ($B) Deal count
All-female founders’ proportion of total Large decline due to outsized

deal count falls to 5.1% financings in 2023
Female-founded company deal count as share of all VC Female-founded company deal value as share of all VC
deal count deal value
30% 30% 27.2%

24.2% 24.8%
25% 22.5% 25%
20% 20%
15% 15%
10% 10%
6.4% 5.1%
5% 5%
2.0% 2.0%
0% 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
All-female founding team At least one female founder All-female founding team At least one female founder
23
Sponsored by
First-time financings on slow pace Fewer female-founded companies raising

Share of VC first-time financings by founder gender Share of VC deal count for female-founded
companies by stage
100% All-male 100% Venture growth

founding team
90% 90%
Late-stage VC
80% Mix 80%
Early-stage VC
70% All-female 70%
founding team
60% 60% Pre-seed/seed
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
2022
2023
2014
2015
2016
2017
2018
2019
2021
2020
2024*
2023
2014
2015
2016
2017
2018
2019
2021
2022
2020
2024*
Large proportion of capital going to TTM fundings lean heavily

late stage toward New York
Share of VC deal value for female-founded companies by stage Top five CSAs by deal count for companies with all-female
founder teams in Q1 2024*
100% Venture growth
90% Combined statistical area Deal count
Late-stage VC
80%
Early-stage VC New York-Newark, NY-NJ-CT-PA 175
70%
60% Pre-seed/seed San Jose-San Francisco-Oakland, CA 103
50% Los Angeles-Long Beach, CA 71

40% Boston-Worcester-Providence, MA-RI-NH-CT 39
30%
Washington-Baltimore-Arlington, DC-MD-VA-WV-PA 31
20%
10% PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
Note: San Diego MSA is excluded in Los Angeles-Long Beach CSA.
0% Austin MSA is included in rankings alongside CSAs.
2014
2015
2016
2017
2018
2019
2021
2022
2023
2020
2024*
24
Sponsored by
A WORD FROM DENTONS

M&A in 2024: Market expectations begin to
reset with positive green shoots emerging
The markets are certainly not hot. The teams that have been able to meet or
froth is off. The pace of dealmaking exceed expectations/projections and Victor H. Boyajian
Global Chair, Dentons
has slowed significantly, in good at the same time build strong balance
Global Venture
part attributed to the interest rate sheets will have the confidence of their
Technology and Emerging
environment and pullback in the boards and investors to accelerate Growth Companies Group
debt and equity capital markets, but strategic growth. This is particularly so
notably in the range of pre-pandemic where investors are looking to find exit Victor leads a global
heights. All of this is further aggravated pathways for portfolio companies. team focused on
representing emerging
by enhanced regulatory scrutiny
growth technology companies, venture capital firms,
and global macroeconomic risk. Break through the siege mentality that corporate strategics, and private equity firms in a
Discouraging news and the harbinger can easily grip markets. Expectations broad array of financings and strategic transactions
of more bad news to come or the as to price and principal terms have from Silicon Valley to Boston and New York, and
resetting of markets with many green been shifting over the past 18 months around the globe.
shoots emerging that will rebound, as to allow for more realistic negotiations
they historically always do, as capital around the table. A classic realignment.
is redeployed? Prospective sellers are more As always, sectors matter. The
aggressively factoring in operational energy and infrastructure, including
While these observations may reflect and other market risk issues in transportation, sectors riding the
the consensus view of the markets at considering whether it is a good time coattails of government policy shifts
the moment, there are opportunities. to consider engaging the markets. And and massive federal investment activity
Markets are settling now that we with investors under some pressure are key areas to watch. Healthcare and
have greater visibility into the Federal to return capital, the stars might see life sciences, along with cybersecurity
Reserve’s intentions with respect to the emergence of a market window for and the related defense and national
interest rates and the economy remains enhanced strategic activity. security sectors, are sectors evidencing
fundamentally sound with strong GDP strength. Corporate venture capital
growth. Supply chain pressures and Most importantly, management teams seems a bit more bullish in its short-
inflationary pressures continue to are continuing to scour channels term outlook as it seeks to meet
ease. Relatively strong cash positions for growth as customers throttle demand for innovation and growth from
on balance sheets and a good amount back spending. To meet growth internal business partners.
of dry powder that investors need to expectations of boards and investors,
deploy capital are positive factors as management teams are increasingly In this environment, management
well. While blockbuster deals reliant on looking at the landscape for select teams will need to devote the requisite
leveraged debt may be on the wane for accretive opportunities. Again, not the time to developing a cogent thesis for
the moment and equity capital markets blockbuster deals but rather the laser- undertaking even a tuck-in acquisition.
are soft, well-positioned emerging focused tuck-in to fill a strategic gap. Investors are looking hard at the
growth companies in the technology Given the stresses in the venture capital financial and market risks associated
sector can still drive strategic growth financing arena, some good values with any transaction and, to that
through M&A activity. Companies abound. Fatigued investors or those end, undertaking longer and deeper
with strong performance are primed lacking the capacity or fortitude to diligence cycles. Past performance and
to take advantage of the current invest in another round are stimulating future trajectories matter. First and
market environment. Management some demand. foremost is profitability. Cash
25
Sponsored by
positions need to be strong to sustain M&A activity can be an exciting way were previously supportive of robust
the business as well as strategic to drive growth, but it is essential that strategic engagement may be cooling
acquisition activity, especially in a tight the right skill set exists around the a bit and asking management teams
financing environment with little room table. And this is particularly so in to slow down on M&A activities so
for operational hiccups. view of global expansion. How does as not to unduly stretch the balance
the management team based in the sheet or distract management. Bottom
But the teams will need to get beyond San Francisco Bay Area expect to line—keep the pulse of the board. In
the numbers. Efficient use of capital manage a team of 150 people in the fact, consider having one of the board
resources will be rewarded. Lack of EU or Singapore? Does the company members serve as part of the core
strategic focus will be punished. And have not only the management skill deal advisory team. This can act as
the critical reality of timing under set and time, but also the basic a tremendous way to gauge ongoing
current market conditions is a key infrastructure to support? All of this interest and support in the realm
consideration. How long will it take to brings additional, and quite significant, of strategic undertakings. Strong
realize operational synergies? What operational expense. performance is the ultimate way to
are the market risks attendant to an build confidence around the table.
extended period of full integration? Keep in mind that if a management
team has begun to socialize strategic So overall a mixed bag, although
Further, will the undertaking of strategic opportunities with the board, the markets seem to be more forward-
activities and the ultimate integration consensus to go forward may have looking than in the recent past with
of any target distract management shifted; one year or even just a few some positive developments emerging.
from its operational focus? Does the months could be an eternity in view Good opportunities are out there for
company have the ability to manage an of choppy markets facing headwinds. those well positioned for the flight
expanded combined enterprise with the Those companies struggling to hit their to quality.
current management team? Strategic numbers may notice that investors who
26
Sponsored by
Investor trends
In Q1, nontraditional investor CVC activity ebbing on trend
participation in venture displayed VC deal activity with CVC participation
divergent trends by deal count, with
4,122
corporate venture capitalists (CVCs) 3,811
and asset managers increasing their
involvement as a proportion of all 2,698
completed deals in the asset class, 2,765
2,629
notching 24.1% and 7.9%, respectively. 2,391
2,091
Also in Q1, the number of deals with 1,885 1,846
1,643 711
other types of nontraditional investors
as a percentage of overall US VC deals
$19.5
$29.5
declined. Segmenting the data by deal

value shows a similar picture, wherein
$175.1
$40.6
$40.2
$117.2
$73.0
$38.6
$89.5
$65.7
$85.1
deals with asset manager involvement
ticked up marginally and deal value with
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
CVC participation increased from 57.5%
in 2023 to 60.8% in Q1 2024. Deal value ($B) Deal count
CVCs
Nearly quarter of deals include a CVC
In Q1, CVCs continued their active
VC deal activity with CVC participation as share of all VC deals
involvement in venture. During the
quarter, CVCs participated in 24.1% of 70%
60.8%
all US VC deals by deal count, denoting 57.5%
60%
an uptick from the 2023 annual level of
22.8%, albeit remaining slightly below 50%
pre-pandemic figures. Sector-wise,
40%
commercial products & services and
software garnered the largest two shares 30% 24.1%
22.8%
of deployed capital from CVCs. In Q1,
20%
commercial products & services deal
value with CVC participation amounted 10%
to $6.1 billion, and software deals with
0%
CVC involvement totaled $4.2 billion.
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Startups operating in those two sectors
that have solid technology, similar Deal value Deal count
customer profiles, and healthy financial PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
metrics present appealing investment
opportunities for CVCs due to their
strategic value. For example, enterprise Compared with other types of strategies and performance with internal
SaaS incumbents may constantly be nontraditional investors, CVCs are stakeholders who are not investors. This
on the lookout for disruptive startups uniquely situated for making investment additional factor explains why CVCs in
that are developing technologies decisions. CVCs that invest off the general are less inclined to participate in
that could complement their existing parent organization’s balance sheet may down rounds. Marking down portfolios
product offerings or have an overlapping be subject to macroeconomic shifts. and incorporating those losses per
client base. This is partly because CVCs also need accounting standards means that
to pitch and explain their investment CVCs are more sensitive to valuation
27
Sponsored by
drops than their non-corporate- expect to see a rebound in crossover participation has been fleeting in the face
affiliated counterparts. From an internal participation in venture. of headwinds. These investors’ ability to
discussion standpoint, CVCs prefer to quickly shift strategies to best fit their
have a clear-cut story to explain and Crossover participation in VC has returns leaves illiquid strategies such as
pitch to internal stakeholders about their become an important piece of the late- VC at their behest.
investment decisions. stage and growth market. As companies
look to stay private for longer, the large At the height of the market in 2021,
Crossover capital sums available from these quarterly deal value participation from
investors are relied upon for support. crossover investors was more than 4.0x
US VC deals with crossover investor Because VC remains an opportunistic the total from Q1 2024. The narrative
participation experienced a steady strategy for crossover investors, their of low capital availability has not been
QoQ decline since Q2 2023, settling
at $11.3 billion across 241 deals in Q1
2024. In the past couple of quarters,
Crossover pullback a hit to capital availability
VC deal activity with crossover investor participation by quarter
deal value with crossover investor
participation remained slightly below $60 800
pre-pandemic levels. The cost of capital 700
$50
for crossover investors differs from that 600
of CVCs. Crossover investors perceive $40
500
opportunities in the underlying value
of assets and can move fast when they $30 400
see attractive upside potential in the 300

$20
long term. This group of investors also 200
responds to multiple years of strong $10
100
exit dynamics, which means that capital
$0 0
deployment from crossover investors
potentially signals the end of an outsized
exit draught. Should recent public listings 2019 2020 2021 2022 2023 2024*
bring about a reopened IPO window, Deal value ($B) Deal count
particularly for tech companies, we PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
Most investor types fall out of VC deals Capital participation remains high
VC deals with nontraditional investor participation as a share VC deals with nontraditional investor participation as a share
of all VC deal count by investor type of all VC deal value by investor type
30% 70%
60.8%
22.8% 24.1% 60% 57.5%
25%
50%
20% 39.4% 33.4%
12.6% 40% 30.6%
10.9% 32.4%
15% 11.5%
10.4% 30%
10% 29.8%
6.8% 26.6%
20%
5% 7.9% 8.8%
10% 4.7%
0.9% 0.7%
0% 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
CVC investor PE investor Asset manager CVC investor PE investor Asset manager
Government/SWF Other tourist investor Government/SWF Other tourist investor

28
Sponsored by
due solely to VCs being more deliberate the largest four ecosystems in the US. In expensive R&D projects. In such cases,
with their investment; a large portion this regard, those funds help propel the smaller funds do not have the capacity
of that void in capital supply has come overall dealmaking momentum, writing to be a meaningful participant for
from crossover firms, as they hold large checks at the earlier stages such as seed, companies that need a capital injection
portfolios of private companies that have and supporting entrepreneurs in parts of tens of millions of dollars or more.
become a weight on their returns. of the US that struggle to compete with
the two coasts in terms of infrastructure, The dichotomy between small funds
Smaller versus larger VC funds talent pool, and capital availability. and established, large-scale funds also
plays out in syndication dynamics. When
Over the past decade, there has been Meanwhile, smaller funds ultimately companies raise a follow-on round, new
a proliferation of smaller-scale venture cannot replace large players in terms of investors look for signs of continued
funds, often run by emerging managers. the latter’s ability to write large checks to support from insiders, but small funds
Those funds play an important role in mature companies or startups operating often encounter the dilemma of lacking
the growing diversification of the venture in certain sectors such as biopharma a substantial amount of reserves due to
landscape, deploying capital to nascent that need significant cash infusion the inherent limitations of their fund size.
companies that may operate outside of to facilitate growth or proceed with
29
Sponsored by
Venture debt
Venture debt struggling one year post-SVB Tech loan value falls again
Venture debt VC deal activity Tech venture debt VC deal activity
2,388 2,173 1,862

2,047
1,536
1,836 1,647 1,369
1,469
1,562 1,769 1,283
1,423 1,141
1,375 1,367 1,083 1,083
1,090 814
323 270
$7.9
$8.4
$30.9
$42.5
$42.5
$26.6
$27.0
$10.6
$14.5
$12.5
$28.0
$20.4
$38.6
$22.2
$34.9
$11.6
$31.1
$10.7
$12.0
$18.9
$7.8
$9.1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Deal value ($B) Deal count Deal value ($B) Deal count
Healthcare loan value has started year slowly

Healthcare venture debt VC deal activity
494 508
452
433
390
355
330
283 291 271
92
$2.2 $1.6 $1.6 $2.7 $6.2 $4.2 $4.6 $5.8 $4.6 $3.5 $1.2
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Deal value ($B) Deal count
30
Sponsored by
Late-stage lending keeping pace Low capital availability at late stage plays
Venture debt VC deal count by stage to debt’s favor
Venture debt VC deal value ($B) by stage
800 $25
700
$20
600
500 $15
400
300 $10
200
$5
100
0 $0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Pre-seed/seed Early-stage VC Late-stage VC Venture growth Pre-seed/seed Early-stage VC Late-stage VC Venture growth
Without bank activity, loan sizes fall BDCs and nonbank funds boost late-
Median and average early-stage venture debt deal value ($B) stage loans
Median and average late-stage venture debt deal value ($B)
$18 $30
$16
$25
$14 $11.2
$12 $11.1 $20 $18.8
$10
$15
$8
$9.8
$6 $10
$4
$2.0 $1.2 $5 $2.3 $2.3
$2
$0 $0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024* 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
31
Sponsored by
A WORD FROM DELOITTE

Charting a path to an IPO: A strong finance
function is vital
While the IPO market remains relatively Looking at 2023, GenAI was the biggest
quiet, there are still opportunities for bright spot for venture-backed startups. Heather Gates
Audit & Assurance Private
young companies to grow through But I think there may be a slight pullback
Growth Leader
acquisition and by attracting further for two reasons: first, lack of a robust
Deloitte & Touche LLP
rounds of VC. In such an environment, regulatory framework for AI; and second,
however, young companies need to have a discrepancy between the high level of With more than 30 years
their financial function in tiptop shape. funding of some companies and their of financial services
Heather Gates, who has been deeply lack of maturity in the marketplace. Still, experience, Heather
serves as the national
involved in all aspects of startups and unlike the early internet, GenAI doesn’t
Private Growth Leader, with oversight of the Deloitte
venture capital for over 30 years, has a appear to have sucked the money out Private, Emerging Growth Company, and Private Equity
vantage point into the matter that few of the room. There’s a lot happening in businesses within Audit & Assurance.
get to enjoy. Read further to benefit from blockchain, fintech, and digital assets.
Heather’s insights and from the deep And they seem to have a strong future. Jackie Artz
bench of experience upon which she and Smart Finance for Growth Companies co-lead
and partner
her Deloitte team can draw. Two sectors not to overlook? Cyber and
cleantech & energy. Every day we read
Alex Jackson
The lay of the land: Bright spots and about phishing episodes, cyberattacks,
Smart Finance for Growth Companies co-lead
other opportunities and stolen identities. With emerging AI and partner
technologies, cyber may well be even
Let’s start with some basics. One thing more important. In regard to cleantech Darrin Stollow
is certain: Exits via IPOs in the United & energy, climate and mass migrations UiPath lead client service partner and East Region
States have fallen considerably off their worldwide are likely to be on the agenda EGC leader
highs of 2021—from over 1,000 that year for governments and companies alike.
to a mere 154 in 2023. 7, 8
While the IPO This is especially true given the recently
market is still pretty quiet, we’re seeing an approved SEC’s climate disclosure rules.9 and an even more strategic role for the
uptick in acquisition activity. Why? First, But no matter your industry, it always finance function.
with valuations down, 2024 may see a pays to have your house in order when
clearing out of pipeline excesses. Second, the IPO opportunity comes knocking. Unfortunately, too often companies
organic growth remains challenging, so might build that function haphazardly. A
acquisitions are one way of growing. My Where’s your finance function headed? clear road map for the finance function
gut instinct says 2024 could be the year could be useful for when the business
of M&A and 2025 that of IPOs. And brisk Banking failures in the past year have grows or has to downsize. Then there’s
M&A activity typically precedes an IPO prompted many startup boards to rethink another question: Do I hire more finance
surge, keeping in mind that some exits their strategies. In the past, they would professionals, or do I rely on an intelligent
are awaiting a lowering of the currently deposit 100% of the VC funds in a bank automation (IA)—the broader umbrella
high interest rates. Yet, the biggest as collateral in return for a venture debt under which AI lives—program to
damper on IPOs may be the turmoil of the loan to expand their working capital. supercharge my existing team?
upcoming election. Now, boards may want to mitigate risk by
depositing less in single banks. That could To me, the IA route seems to be shaped
mean new cash management issues by three factors: the challenge of talent
7: “The Current IPO Market: Factors in Its Decline and Reversing the Trend,” Forbes, Giri Devanur, February 1, 2023.
8: “The Best Performing US IPOs of 2023,” Visual Capitalist, Marcus Lu, February 1, 2024.
9: “SEC Approves Rule Requiring Some Companies to Report Greenhouse Gas Emissions. Legal Challenges Loom,” The Associated Press, Suman Naishadham, March 6, 2024.
32
Sponsored by
acquisition and retention; deploying task assignments. I’ve already touched on the necessary top financial talent. That’s
that talent to achieve a strategic value GenAI with its machine learning, natural because a prospective employee can see
add; and wrangling and harmonizing language processing, and predictive that routine tasks are automated and that
disparate data. Unless you can do that, analytics that enable data-driven decision they have the opportunity to use their
IA potentially won’t deliver its full value. making and process optimization. But skills to the greatest effect. The other is
Of course, you need to have the right GenAI can also supercharge other tasks— VC funding. For more mature enterprises,
risk and fraud prevention measures and such as intelligent document processing an automated finance function often
procedures in place before onboarding that extracts, classifies, and validates speaks volumes to VCs about efficiency,
IA systems. In building their function, information and data from PDFs and Word controls, and effective management.
however modest in size, CFOs could docs, among other things. Then there’s To help achieve sustained growth as a
benefit from a balancing of traditional cognitive automation that combines startup, the name of the game is funding.
financial responsibilities with strategic GenAI and human-like reasoning to Consider Deloitte’s recently launched
leadership and technological advances. address a number of complex tasks. Smart Finance for Growth Companies.
And let’s not neglect chatbots and This turnkey program combines
Does IA make sense for your virtual assistants to handle employee UiPath’s leading GenAI-powered
finance function? inquiries and streamline communications automation software and Deloitte’s
within the finance function itself. So extensive experience guiding growth
Depending on a number of factors, IA how do you select your path forward? companies and implementing technology
costs no more annually than one qualified If you’re uncertain, I’d suggest starting transformations. Interested in learning
financial professional. The difference is with process mining. It uses GenAI to more? Contact my team today.
this: With IA, you can scale up and grow help analyze your existing processes to
without adding headcount, something identify inefficiencies, bottlenecks, and This publication contains general information only
that may appeal to VC investors. areas for improvement. and Deloitte is not, by means of this publication,
rendering accounting, business, financial,
investment, legal, tax, or other professional advice or
But there are also several practical IA elevates the finance function services. This publication is not a substitute for such
issues to weigh. You would need to professional advice or services, nor should it be used
define the anticipated value and return In using AI to enhance the quality of your as a basis for any decision or action that may affect
on investment (ROI), notably how IA will data and information, you need first to your business. Before making any decision or taking
any action that may affect your business, you should
likely affect revenue, cost savings, and determine the correct inputs and outputs
consult a qualified professional advisor.
customer/employee satisfaction. And by asking yourself, “Do we have the
don’t overlook any possible changes to right variables in play?” Achieving the Deloitte shall not be responsible for any loss
your risk profile or issues of integrating desired quality data and overall outcomes sustained by any person who relies on this
with your data systems. Once that’s done, typically requires understanding exactly publication.
you will probably need to prepare for which processes you are automating, the
About Deloitte
necessary change management, identify requisite data needed, and the attending
Deloitte refers to one or more of Deloitte Touche
any ethical issues, and then choose a data security and compliance issues.
Tohmatsu Limited, a UK private company limited by
vendor. There’s no denying it’s a serious guarantee (“DTTL”), its network of member firms, and
and complex process. But here’s the main takeaway: IA can help their related entities. DTTL and each of its member
elevate the finance function by freeing firms are legally separate and independent entities.
A variety of options for IA up quality time. Time to focus on larger DTTL (also referred to as “Deloitte Global”) does
not provide services to clients. In the United States,
strategic business or technical accounting
Deloitte refers to one or more of the US member
There’s no one-size-fits-all solution for IA. issues; to follow up on unexpected
firms of DTTL, their related entities that operate
There’s a variety of value-add processes results; to engage in more thorough and using the “Deloitte” name in the United States, and
available—from robotic process thoughtful forecasting. And time to take their respective affiliates. Certain services may not
automation (RPA) that mimics human a long-term perspective on the business, be available to attest clients under the rules and
actions and can undertake data entry, often free from the pressure of meeting regulations of public accounting. Please see http://
www.deloitte.com/about to learn more about our
invoice processing, and other rules-based an immediate deadline.
global network of member firms.
procedures, to workflow automation that
can streamline end-to-end processes by Finally, there are two other important Copyright © 2024 Deloitte Development LLC. All
automating approvals, notifications, and points: One is that IA can help attract rights reserved.
33
Sponsored by
Exits
Reddit and Astera shine for VC
VC exit activity
1,997
1,409
1,343
1,266
1,134 1,282
1,123 1,057 1,099 1,161
300
$113.1 $77.9 $65.6 $105.0 $135.8 $251.0 $297.4 $797.7 $79.0 $66.3 $18.4
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Exit value ($B) Exit count Estimated exit count

Reasons for optimism in Outside of a couple IPOs, exits slow

slow quarter VC exit activity by quarter
$300 600
Q1 will not be looked upon as a strong
quarter for venture exits, but there may $250 500
be more reason for optimism at the
current moment than any point over $200 400
the past two years. The $18.4 billion
$150 300
in exit value is still low, and it is a sum
lumped within just a few exits. The $100 200
major stories of the quarter are the
$50 100
IPOs of Astera Labs and Reddit, both
of which had much stronger debuts $0 0
than the anticipated IPOs of Klaviyo Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
and Instacart in Q3 2023. Their IPO
2019 2020 2021 2022 2023 2024*
success shows that the stabilized macro
environment may present further Exit value ($B) Exit count Estimated exit count
opportunities for companies to exit in PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
the coming quarters.

and, potentially, unprofitable startups. spiked more than 72% on its first day
The hype of AI is not limited to the Astera Labs generated exit value of of trading, generating sizable buzz for
private markets. NVIDIA has shown nearly $5 billion on $235 million in total the industry.
that the promise of AI can translate into investment. Though the company was
growth, though the $2 trillion business unprofitable at the time of its IPO, it While Astera may have been able to
is not in comparable company sets for showed traits consistent with many more directly ride AI tailwinds than
private companies. The question was if VC-backed startups as a high-growth, Reddit, the social media company
tailwinds would translate to VC-backed high-upside company. Astera Labs rode the sector’s hype by detailing its
34
Sponsored by
data licensing prospects. Not only will The FTC and market conditions the annual figures have remained
Reddit provide API access to customers slowing M&A roughly in line with previous years. The
in order to discover emerging trends scrapped acquisitions of Figma and
from discussions on its platform, but it The Federal Trade Commission (FTC) Maze Therapeutics, both of which noted
will also license data to AI developers has been blamed for its aggressive the FTC as a contributing factor, likely
to train large language models (LLMs). stance on M&A, particularly that of cemented the commission’s place as
Though the company continued to Big Tech acquirers; it even opened persona non grata within the venture
operate at a net loss, the opportunities an investigation into the OpenAI industry. Though just two acquisitions
of AI and of adding the data licensing as and Anthropic financings. Since the of $1 billion-plus were completed in Q1,
a revenue stream atop its advertising beginning of 2022, just 17 acquisitions broader market conditions should also
business were a large carrot for of $1 billion or larger have been be highlighted for the pressure that the
prospective investors to chase. After completed, though outside of 2021, FTC has created for the M&A market.
pricing at the top of its range, the
company closed its debut up nearly 50%
Small-scale M&A cannot support VC
and has been able to hold that level.
Quarterly VC exit value ($B) by type
Public markets showed strong $300 Buyout

performance in Q1—the S&P 500 and Public listing
$250
the NASDAQ were up double-digits—
Acquisition
cementing positive momentum for
$200
VC-backed companies. However, how
much that growth will translate into $150
relieving the pricing pressure that
many companies will face, especially $100
those unable to showcase their
ties to AI, remains to be seen. Even $50
pricing at the top of its range, the
IPO presented Reddit with a roughly $0
35% lower valuation than its previous Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
private round. 2019 2020 2021 2022 2023 2024*
Ibotta, which filed its IPO registration
after the Reddit and Astera IPOs, will
be another notch needed to sustain
More companies exiting earlier
Share of VC round count by series where next round is an exit via acquisition
momentum for a return of public
listings. Though the company uses AI 100% D+
in its promotional distribution, it is not 90% C
in a position to ride the tailwinds off
80% B
the growth of AI in general. However,
70% A
the company has turned its business
profitable while showing 50% revenue 60% Seed
growth YoY and increasing margins— 50%
Pre-seed
though it has accumulated $210 million 40%
in aggregate losses. This may be more of
30%
the traditional unicorn filing that could
20%
push more company movement toward
IPOs. Either way, AI will continue to 10%
be front and center within prospectus 0%
filings that come across over the next 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
couple quarters.
35
Sponsored by
The US economy has remained much Lagging exit market companies have left the market with
more stable than anticipated by pressuring unicorns high values and few options.
continually showing strong jobs figures
and corporate earnings. However, Though unicorns are a small segment of The only unicorns to successfully
the current environment is incredibly the overall US VC market, together they exit in Q1 were Reddit and Astera
different from when many companies account for roughly two-thirds of the VC Labs—though Udacity has agreed to
last raised investments. Across the market value. They are also companies an acquisition that is still subject to
board, there still exists a gap between most in need of the IPO market to closing, and Ibotta filed for an IPO likely
buyer and seller price expectations. return to normal. The aggregate unicorn to take place in Q2. Momentum may
High-quality businesses may be valuation has surpassed $2.4 trillion, be picking up for further exits, but the
attractive targets for corporations and 731 companies now hold the title. venture financing market is not poised
and PE shops that see a strategic fit. Yet the few exits achieved by these to support excess deal activity for a
However, even some of these strong
assets may have to take a haircut on
Unicorns account for $2.4B market cap
the price tag. Continuing economic
Unicorn count and aggregate unicorn post-money valuation ($B)
uncertainty, challenges in achieving
cash flow break-even and scaling a 800 $3,000
business, and a potential push across 700
a company’s cap table for liquidity are
$2,500
600
among the considerations for a startup
$2,000
to hasten its process for finding a home. 500
400 $1,500
Though M&A did increase quarter over
quarter, a large majority were small, 300
$1,000
nonmaterial acquisitions. Just $6 billion 200
of exit value was generated through $500
100
M&A on the quarter—less than the
average generated each quarter in 2023. 0 $0
Current market conditions should be 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
a boost to middle-market deals and Aggregate post-money valuation ($B) Active unicorn count New unicorn count
consolidation within crowded sectors, PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024
yet we have not seen a material increase
in VC-backed company acquirers, nor
have PE-backed add-ons increased
Hold times pushing fund timelines
Distribution of unicorn hold periods*
significantly to date. Anecdotes of PE
firms looking around portfolios continue
to be just that for the moment.
There has been growth in the proportion

of M&A being made after early-stage
rounds. Nearly 90% of the acquisitions
made in Q1 were made no later than
right after the Series B financing. That
figure has been steadily creeping up
over the past decade, but with market
pressure mounting on companies raising
new rounds of financing, we expect 7.6% 23.0% 32.4% 23.8% 13.2%
more companies and early investors
to be comfortable with exiting early to Less than 3 years 3-6 years 6-9 years 9-12 years 12+ years
recycle some capital to funds.
36
Sponsored by
large group of unicorns that decide they The term “unicorn” generates a wide private, but unable to access new capital
may need to shore up their balance variety of thoughts across the market. by going public in the current climate.
sheets before listing out their finances Regardless of the title bestowed upon
to the public. billion-dollar valuations, the fact is Unicorns have now been held within
that a small group of companies is portfolios for an average of 8.1 years,
With the expectation that many of responsible for a large portion of the which is well longer than normal VC-
the unicorns raised at high multiples, paper gains that the market has used backed companies and thus increasing
their public counterparts have shown to incentivized LPs over the past few liquidity risk for many investors and
significant compression in the public years. If those returns are unable to LPs. Though realized returns of these
market over the past five years. If we be realized, or if they are realized at companies could negate the pressure
take a rolling look at the multiples that a large discount, LPs could look to from extended hold times, pressured
companies moving from the private reduce allocation to the strategy. A sales through available secondary
to public market command, current large discrepancy between public and options are not the ideal process for
multiples have shrunk significantly private market valuations has grown returns. We have also seen the pressure
since many unicorns last raised funding. over the past few years because of for exits manifest in alternative liquidity
Formerly VC-backed SaaS companies the slow IPO market. Currently private options. Stripe has raised multiple
have seen their multiple inch back up VC-backed SaaS companies have an billion-dollar rounds to ease liquidity
this year, but at 10.0x, they are trading aggregate post-money valuation of $1.1 pressure for employees and early
at nearly 25% of the premium from a trillion, yet the public market cap of SaaS backers, and Databricks approved a
couple years ago. Not only will it be companies that have gone public over secondary sale for employees. Instacart
tough to exit under these conditions, but the past five years is just $329 billion. allowed employees to sell shares in the
it will be similarly challenging to raise The “private for longer” mantra has left IPO. The longer that liquidity pressure
more private capital. many companies in a difficult spot: too builds, the more strained the top of the
large to raise much additional capital in venture market will become.
37
Sponsored by
Fundraising and performance

Q1 fundraising lowest in past decade
VC fundraising activity
1,577
1,458
937
803 793
669 597
585 631
500
100
$9.3
$40.7 $39.6 $50.4 $43.9 $71.8 $73.8 $89.7 $183.5 $188.4 $81.8
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Capital raised ($B) Fund count
LP caution builds Large deficit in cash flows in 2023

VC cash flows ($B)
The continued lack of liquidity from
venture stifled fundraising activity $150
in Q1, culminating in a meager $9.3 $100

billion committed to 100 funds. Fund
managers returning to market this $50
year, many of which put off fundraising
$0
in 2023 in hopes of improved market
conditions, are being met with -$50
increased resistance in the form of
-$100
LP caution.
-$150
We have highlighted the emphasis
1998
1999
2000
2001
2002
2003
2004
2005
2007
2006
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2021
2020
2022
that LPs place on cash distributions 2023*
among current market conditions. The
latest cash flow data shows that US Contributions Distributions Net cash flow
VC net cash flows in 2022 and the first PitchBook-NVCA Venture Monitor • Geography: US • *As of June 30, 2023
half of 2023 left a $54.8 billion hole

in LP pockets, highlighting the strain average of 17.3%. This is suggestive of reallocate capital in portfolios, LPs are
that the lack of exits is putting on the how far return profiles have fallen and spending more time conducting due
venture market. Through Q3 2023, the serves as justification for the added diligence on new managers and re-
US VC 12-month distribution yield as caution of LPs. evaluating managers they have already
a percentage of net asset value (NAV) committed to determine whether they
(five to 10 years) fell to a near-all-time Coupled with the denominator effect’s are sufficiently differentiated in terms
low of 6.0%, well below the 10-year lingering symptoms steering LPs to of investment theses, networks, and
38
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Distributions need to pick up pace

VC distributions as share of NAV for funds aged 5-10 years
40%
35%
30%
25%
20% 21.7%
15%
10% 5.8%
5%
0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023*
PitchBook-NVCA Venture Monitor • Geography: US • *As of September 30, 2023
experience to drive strong repeatable Dry powder continues to grow

returns. The market exuberance VC dry powder ($B) by vintage
in recent years drove inefficiently
$310.2 $316.9 2023
sized funds and style drift, which
have in turn likely shifted the return 2022
expectations of these funds despite $226.8 2021
strong track records. 2020
$172.9 2019
After the global financial crisis (GFC),
US VC fundraising did not recover $143.9 2018
$125.5 Overhang by vintage
meaningfully until 2012. The market $103.0 $104.4 2017
was markedly different during that $85.3 2016
$67.0 $71.5
time, but newer LPs in venture that
were burned by the market drop in
2022 may be wary of too quickly Cumulative overhang
recommitting to the strategy. If this
market ends up resembling that of 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023*
the GFC, we still have a couple years PitchBook-NVCA Venture Monitor • Geography: US • *As of September 30, 2023
of middling fundraising figures.

This would drive consolidation of corral new commitments, they are net new investments. As a result,
managers, as LPs choose where to sitting on a record high amount of dry $227.9 billion, or 73.1%, of US VC dry
continue committing, and would drag powder, totaling $311.6 billion, and are powder sits within 2020 through 2022
on dealmaking. deploying capital at a slower pace. vintage funds. Investors are spending
Many do not even need to fundraise. more time and capital supporting
Dry powder remains at Amid the elevated market volatility existing portfolio companies, thereby
all-time high and the continued reconciliation of limiting the total capital outflows
public and private valuations, many from funds. The dearth of exit
While fund managers are tirelessly investors are taking a “wait-and-see” activity, coupled with the retreat of
working to assuage LP caution and approach, deploying capital into fewer nontraditional investors, has relaxed
39
Sponsored by
Fund sizes decline swiftly

Median and average VC capital raised ($M)
$180
$157.3
$160
$140
$120 $104.6
$100
$80
$60
$35.0
$40 $22.5
$20
$0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Median Average
the once hypercompetitive dealmaking percentage of closed funds falls further rely on a small percentage of the
environment such that investors can when it is looked at as a proportion of actual venture firms and the crossover
spend more time evaluating startups firms. 3.6% of the firms that raised a investors that have gone toward
and be more selective and slower in fund between 2021 and 2023 raised greener pastures.
deploying capital. 54.5% of the total commitments.
Dry powder figures will likely plateau
Generally, record-high dry powder is Moving back to the VC dry powder for the next few quarters of data.
a positive for the venture market as figure, the large amount of recent However, any material decline will
it signals a surplus of capital waiting fundraising from so few investors likely not occur until late- and growth-
to be invested in startups. The figure highlights the disparity between the stage financings pick up meaningfully.
remains highly concentrated as well. rising overhang and the actual activity A fall in available dry powder may
Roughly 60% of the total is held by occurring in the market. With so occur first toward the lower end of
funds of $500 million or larger, and much concentration in large funds, fund sizes. Just $29.6 billion (9.5%) is
a full $124.5 billion is held by funds individual investors right-siding their held in funds closed on less than $100
that closed on at least $1 billion. This activity from the hyped market of 2021 million. The slow fundraising market
concentration says more about recent pressures the market significantly and pressure for these smaller funds
years of fundraising than topline more than expected. to continue deploying capital to seed
fundraising figures can. Record years and early-stage deals may draw down
of fundraising have led to a false sense While there are more small funds now reserves faster than new commitments
of security that capital is ready to be than ever before, much of the capital can uphold capital availability.
deployed. Between 2021 and 2023, crunch is beginning when larger funds
just 7% of funds accounted for nearly are needed to support growth. The
60% of the capital raised. That small more pressured areas of the market
40
Sponsored by
Obstacles for first-time Amid market conditions that favor a leveraging their investment history while
fund managers fund manager’s ability to curate liquidity at other firms and startups. This resulted
for LPs, committing capital to a first-time in the five largest first-time funds closed
Macroeconomic headwinds have manager could add unnecessary risk to in Q1 receiving a total of $1.06 billion
negatively impacted fund managers an LP’s portfolio. in commitments, which accounts for
across the ecosystem, but first-time 67.0% of the total capital raised by
fund managers have faced more One manifestation of the higher risks first-time managers. While the trickle
obstacles than their emerging and associated with first-time managers of additional first-time fund closures in
established peers in 2024 so far, is their ability to close a follow-on the coming quarters will surely decrease
resulting in just $1.6 billion committed fund. We found that 63.0% of first- this concentration, we anticipate the
to 28 funds through Q1. The largest time managers go on to raise a second elevated caution of LPs and rigor in
obstacle faced by first-time managers fund. First-time managers that have evaluating first-time managers to
is their lack of investment track records. found success in 2024 so far did so by impede first-time fund count and capital
raised through 2024.
New firms struggling to raise
VC first-time fundraising activity
428
348
284
255 254
221 214 220
189
149
28
$1.6
$6.1 $5.4 $7.0 $11.5 $13.1 $9.9 $9.5 $23.0 $14.6 $13.4
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
Capital raised ($B) Fund count
Both emerging and established managers challenged to raise

Share of VC capital raised by manager experience
100% Experienced firm
Emerging firm
80%
60%
40%
20%
0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024*
41
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Q1 2024 US league tables

Most active investors Most active investors early stage* Most active investors late stage* Most active investors growth stage* Most active accelerator/incubators
pre-seed/seed* in VC deals*
1 Pioneer Fund 51 1 Andreessen Horowitz 15 1 Alumni Ventures 13 1 Capital Advantage Ventures 4 1 Y Combinator 37
2 Y Combinator 20 2 Y Combinator 14 2 FJ Labs 9 2 Perceptive Advisors 3 2 Techstars 32
2 Elevate Ventures 20 3 ImpactAssets 12 2 General Catalyst 9 2 Palo Alto Growth Capital 3 3 Plug and Play Tech Center 10
4 Alumni Ventures 19 4 FJ Labs 11 4 Techstars 6 2 Andreessen Horowitz 3 3 IndieBio 10
5 Antler 18 5 Techstars 9 4 RA Capital Management 6 2 Bossanova Investimentos 3 5 Neo 8
6 Techstars 16 5 Sequoia Capital 9 4 ImpactAssets 6 2 General Catalyst 3 6 Nvidia 6
7 WndrCo 8
7 Everywhere Ventures 13 4 10X Capital 6 2 ImpactAssets 3 7 Breakthrough Energy 4
7 General Catalyst 8
8 Sequoia Capital 12 8 Sands Capital 5 2 Kleiner Perkins 3 8 Expa 3
7 Borderless Capital 8
9 Triangle Tweener Fund 11 8 OrbiMed 5 9 Calm Ventures 2 8 LifeX Ventures 3
7 Alumni Ventures 8
9 Soma Capital 11 8 HDS Capital 5 9 ARK Venture Fund 2 8 AI Fund 3
11 WAGMI Ventures 7
9 SOSV 11 8 Calm Ventures 5 9 SymBiosis Capital Management 2 8 Berkeley SkyDeck 3
11 Khosla Ventures 7
12 IndieBio 9 8 Andreessen Horowitz 5 9 Denniston Family Office 2 8 Genesis Capital 3
11 Afore Capital 7
13 Gaingels 8 13 Foresite Capital 4 9 Pura Vida Investments 2 8 Elemental Excelerator 3
11 Aperiam Ventures 7
13 FJ Labs 8 15 Entrepreneur Ventures (Fund) 6 13 Entrepreneur Ventures 4 9 Gaingels 2 8 Everest Ventures Group 3
15 Andreessen Horowitz 7 15 Hashed 6 13 Surveyor Capital 4 9 Spur Capital Partners 2 15 Unreasonable Group 2
16 Neo 6 15 Quiet Capital 6 13 Triangle Tweener Fund 4 9 Alumni Ventures 2 15 Maze X 2
16 TEDCO 6 15 GV 6 13 Western Technology Investment 4 9 Cormorant Asset Management 2 15 Alchemist Accelerator 2
16 MH Ventures 6 15 Geek Ventures 6 13 Sequoia Capital 4 9 Gilde Healthcare 2 15 gener8tor 2
16 Liquid 2 Ventures 6 15 ARCH Venture Partners 6 13 IAG Capital Partners 4 9 BlackRock 2 15 Ed3n Ventures 2
16 Greycroft 6 15 Coinbase Ventures 6 13 Gaingels 4 9 Honeywell Ventures 2 15 5G Open Innovation Lab 2
16 Guillermo Rauch 6 22 Black Angel Group 5 13 Khosla Ventures 4 9 RA Capital Management 2 15 Wayra 2
16 General Catalyst 6 Ben Franklin Technology Partners of Southeastern 13 Congruent Ventures 4 9 ArrowMark Partners 2 15 Johnson & Johnson Innovation - JLABS 2
22 5
Pennsylvania
16 AlleyCorp 6 13 Connecticut Innovations 4 9 Silver Lake 2 15 BrainTrust Founders Studio 2
22 Aza Ventures 5
16 Climate Capital 6 13 ARCH Venture Partners 4 9 BAM Elevate 2 15 LAUNCH Fund 2
22 BlackDragon 5
16 Big Brain Holdings 6 13 Contour Venture Partners 4 9 SV Angel 2 15 Opus Faveo Innovation Development 2
22 Bankless Ventures 5
26 Pear 5 13 Crosslink Capital 4 9 Memorial Hermann Foundation 2 15 Microsoft for Startups 2
22 Robot Ventures 5
26 Trac 5 22 Union Square Ventures 5 PitchBook-NVCA Venture Monitor
9 Viking Global Investors 2 15 Arka Venture Labs 2
26 WestWave Capital 5 22 New Enterprise Associates 5
*As of March 31, 2024 9 MicroVentures 2 Ben Franklin Technology Partners of Central and
15 2
Northern Pennsylvania
26 NGC Ventures 5 22 Nat Friedman 5 9 Factorial Funds 2
26 Plug and Play Tech Center 5 22 Pantera Capital 5 9 Next Level Ventures 2 PitchBook-NVCA Venture Monitor
*As of March 31, 2024
26 Launch Tennessee 5 22 Pioneer Fund 5 9 DCVC 2
26 Invest Nebraska 5 22 Polychain Capital 5 9 Novo Holdings 2
26 8VC 5 22 HDS Capital 5 9 Rally Ventures 2
26 10X Capital 5 22 Elad Gil 5
PitchBook-NVCA Venture Monitor
26 Asymmetric Capital Partners 5 22 Foresight Ventures 5 *As of March 31, 2024
22 Amino Capital 5
*As of March 31, 2024 22 BoxGroup 5

*As of March 31, 2024
43
Sponsored by
Methodology
Deals together as late stage) either by the series of entity (corporate or financial acquisition). This
stock issued in the financing or, if that information does not include secondary sales, further sales
We include equity investments into startup is unavailable, by a series of factors including: after the initial liquidity event, or bankruptcies.
companies from an outside source. Investment the age of the company, prior financing history, M&A value is based on reported or disclosed
does not necessarily have to be taken from an company status, participating investors, and more. figures, with no estimation used to assess
institutional investor. This can include investment the value of transactions for which the actual
from individual angel investors, angel groups, Nontraditional investors: “CVC” includes rounds deal size is unknown. IPO value is based on the
seed funds, VC firms, corporate venture firms, executed by established CVC arms as well as direct pre-money valuation of the company at its IPO
corporate investors, and institutions, among equity investments by corporations into VC-backed price. One slight methodology update is the
others. Investments received as part of an companies. “PE” includes VC deals by investors categorical change from “IPO” to “public listings”
accelerator program are not included; however, if whose primary classification is PE/buyout, growth, to accommodate the different ways we track
the accelerator continues to invest in follow-on mezzanine or other private equity. “Crossover” VC-backed companies’ transitions to the public
rounds, those further financings are included. All investors are a subset of nontraditional investors— markets. To give readers a fuller picture of the
financings are of companies headquartered in the specifically asset managers, hedge funds, mutual companies that go public, this updated grouping
US, with any reference to “ecosystem” defined as funds, and sovereign wealth funds—that have been includes IPOs, direct listings, and reverse mergers
the combined statistical area (CSA). We include active in VC investment across any stage. They via SPACs.
deals that include partial debt and equity. are referred to as crossover as these investors are
likely to be participating at the late stages directly Fundraising
Pre-seed/seed: When the investors and/or press prior to an exit.
release state that a round is a pre-seed or seed We define VC funds as pools of capital raised
financing, it is tagged as such. If the company Venture debt: The venture debt dataset is for the purpose of investing in the equity of
is under two years old and the round is the first inclusive of all types of debt products raised by startup companies. In addition to funds raised
institutional investment in the company, the deal VC-backed companies, regardless of the stage of by traditional VC firms, PitchBook also includes
will be tagged as pre-seed unless otherwise stated. company. In mixed equity and debt transactions, funds raised by any institution with the primary
Regulatory filings under $10 million for deals equity is excluded when the amount is of known intent stated above. Funds identifying as growth-
where investors are unknown are classified as seed value. Financings that are solely debt are included stage vehicles are classified as PE funds and are
unless pre-seed parameters are met. in this dataset, though not incorporated into not included in this report. A fund’s location is
the deal activity dataset used throughout the determined by the country in which the fund’s
Early stage: Rounds are generally classified report. Mixed equity and debt transactions will be investment team is based; if that information is
as Series A or B (which we typically aggregate included in both datasets. not explicitly known, the HQ country of the fund’s
together as early stage) either by the series of general partner is used. Only funds based in the
stock issued in the financing or, if that information Exits United States that have held their final close are
is unavailable, by a series of factors including: included in the fundraising numbers. The entirety
the age of the company, prior financing history, We include the first majority liquidity event for of a fund’s committed capital is attributed to
company status, participating investors, and more. holders of equity securities of venture-backed the year of the final close of the fund. Interim
companies. This includes events where there close amounts are not recorded in the year of the
Late stage: Rounds are generally classified as is a public market for the shares (IPO) or the interim close.
Series C or D or later (which we typically aggregate acquisition of majority of the equity by another
44

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Q1 2024

The definitive review of the US venture capital ecosystem

PitchBook Data, Inc.

National Venture Capital Association (NVCA)

Dealmaking 9 J.P. Morgan Commercial Banking

Gaming 21 Contact J.P. Morgan

Exits 34 Deloitte & Touche LLP Audit & Assurance

See how we can support your growth at jpmorgan.com/InnovationEconomy.

2019 2020 2021 2022 2023 2024*

that rates cuts will occur during the first

The US VC-backed company count Company inventory continues to grow

consolidate sectors and talent.

Public multiple expansion benefits potential IPOs

IPO Index falls back in line with S&P 500

Due to the headwinds still present,

Continued slowness in Deal activity off to slow start

In Q1, the pace of dealmaking continued 19,078

needed by venture-backed startups at

the venture-growth stage, only $1.00 is

lifecycle, and nascent startups were

Amid a harsh fundraising climate,

The nascent stages stumble 0%

from smaller funds. With smaller AUM, Valuations get boost in Q1

the cost structure and focus on

Slight valuation uptick $15

Life sciences sees lowest deal count in years

Just $20 billion invested in tech during Q1

3: “Companies w/ Layoffs,” Layoffs.fyi, April 4, 2024.

A WORD FROM J.P. MORGAN

Regional spotlight Deal count shift at

34.6% of deal count went to the Bay Area and NY

0% 50% 100% 0% 50% 100%

PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024

Miami New York Austin

4,361 100% Venture growth

$23.9 $23.1 $300 $262.4

$350 50 $2,500 180

A large proportion of capital continues to Wealthtech, capital markets, and financial

CFO stack Financial services infrastructure Payments Regtech Wealthtech

402 100% Venture growth

$300 35 $1,400 140

$250 30 $1,200 120

Development Operations Access Experience Content

All-female founders’ proportion of total Large decline due to outsized

30% 30% 27.2%

First-time financings on slow pace Fewer female-founded companies raising

100% All-male 100% Venture growth

Large proportion of capital going to TTM fundings lean heavily

50% Los Angeles-Long Beach, CA 71

PitchBook-NVCA Venture Monitor • Geography: US • *As of March 31, 2024

A WORD FROM DENTONS

declined. Segmenting the data by deal

see attractive upside potential in the 300

Government/SWF Other tourist investor Government/SWF Other tourist investor

2,388 2,173 1,862

Healthcare loan value has started year slowly

A WORD FROM DELOITTE

Exit value ($B) Exit count Estimated exit count

Reasons for optimism in Outside of a couple IPOs, exits slow

the coming quarters.

Public markets showed strong $300 Buyout

There has been growth in the proportion

Fundraising and performance