Investors in startups kept their wallets tight in the first quarter of 2024, according to data from Crunchbase. While some notable exceptions, such as some AI, healthcare, energy, and robotics startups, received large amounts of investment, the overall mood at the beginning of the year was cautious.
For further analysis, take a look at 11 charts based on recent Crunchbase data showing the state of the startup world in early 2024.
Startup investors around the world remain cautious
Global first-quarter startup investment was the second worst quarter since 2018, according to data from Crunchbase. The total investment amount has improved from Q4 2023, and that is simply due to the following reasons: that This quarter was the worst in six years.
North America, the world’s largest startup investment market, where about half of all venture capital flows to the region, also suffered a similar slump in funding.
Still, investors invested heavily in some AI and healthcare startups, with these two sectors leading the way in total global investment in the first quarter.
Early stage funding actually increased
Despite the overall drop in funding, global investment in early-stage startups actually increased in the first quarter, according to data from Crunchbase.
Funding at this stage totaled approximately $29.5 billion, up 6% year over year, led by large Series B funding in the AI, electric vehicle, and green energy sectors.
Seed and angel investments are also doing better than they were late in the season, giving hope that as the recovery continues, there will be a strong class of young companies ready to receive funding and grow. There is.
A16z emerges as a leader in the new funding landscape
In late 2023, venture capitalist Marc Andreessen wrote the Techno-Optimist Manifesto, a long, passionate, and somewhat rambling defense of the technology sector.
Regardless, based on investment activity, his company appears to be very bullish at the moment. Andreessen Horowitz (a16z) participated in 27 post-seed funding rounds in the first quarter of 2024. This was more participation than any other venture investor. According to Crunchbase data.
Runners-up for the title of Most Active Investor in Q1 were accelerator Y Combinator, which backed 18 known post-seed deals (in addition to more seed rounds), and General Catalyst, with 15 rounds. included.
Notably, A16z was also the most active startup investor in 2023.
Cybersecurity: Not recession-proof, but resilient
It is sometimes said that cybersecurity is virtually recession-proof. After all, hackers don’t rest just because the economy is down.
That’s not exactly true, but investments in cyber startups in 2023 were only a third of what they were during the 2021 VC boom. Funding for this sector has proven resilient compared to other industries.
Venture investors spent $2.7 billion in 154 deals backing cybersecurity startups in the first quarter, making it the industry’s highest fundraising quarter in the past three quarters, according to data from Crunchbase.
Investors who spoke to Crunchbase News said there is still a lot of interest in this space, especially when it comes to new technologies such as AI.
“The widespread adoption of generative AI technology, coupled with recent geopolitical conflicts such as the Russia-Ukraine war and the Israel-Gaza war, has increased the frequency of cyberattacks,” said Gili Raanan, founder and partner at CyberStarts. and the sophistication is increasing,” he said in a previous interview. .
Despite China’s gains, Asian financing remains slow
Although global venture investment increased slightly, venture funding to Asia-based startups fell again in the first quarter.
Total venture funding in the region fell to $17.3 billion in the first quarter, down 4% from Q4 2023 and down 8% year over year. This total represents the lowest amount raised in Asia in a single quarter since Q4 2016.
However, investment in Chinese startups actually increased in the first quarter thanks to several large rounds. Chinese startups raised $1.1 billion in the first quarter, up 9% from the previous quarter and 14% from the first quarter of 2023, according to data from Crunchbase. The country remains the region’s largest startup market.
As U.S.-China relations remain strained, investment in Chinese startups in recent years has been led by Asian countries’ own investors rather than U.S. venture capital firms.
Major financings for China-based companies in the first quarter included: His electric car maker Zhiji Automobile has raised his $1.1 billion in Series B. Artificial intelligence startup Moonshot AI has raised over $1 billion in a funding round led by Alibaba Group and HongShan (formerly Sequoia Capital China). Low-orbit broadband satellite network company Yuanxin Satellite has raised $943 million in Series A led by China Development Bank.
The Latin American financing scene is struggling, but there are notable exceptions.
Funding for Latin American startups also reached its lowest level in years last quarter. Both dollar investment and number of transactions across each stage declined.
Overall, investors spent just $579 million in seed to growth stage rounds in Latin America in the first quarter of 2024, according to data from Crunchbase. This is a 17% year-over-year decline and a 39% quarter-over-quarter decline.
The past quarter marked a particularly sharp decline from the region’s fundraising peak nearly three years ago. At its peak, investors pumped more than $7 billion into Latin American companies in a single quarter of 2021.
However, one Latin American country bucked this trend. Investments in Colombian startups more than tripled from the previous quarter, reaching $188 million. This is mainly due to large rounds from Bogotá-based fintech companies Simetrik and Bold.
Europe is (mostly) stable
In Europe, on the other hand, startup funding did not increase noticeably, but it also did not decline significantly.
Venture investment on the continent reached $11.8 billion in the first quarter of 2024, up slightly from the fourth quarter of 2023 but down less than 10% from the first quarter of 2023, according to data from Crunchbase.
Overall, around 18% of global venture capital in the first quarter was allocated to European startups.
The main funding sectors in Europe were financial services, healthcare and energy. AI companies raised $1.4 billion, about 12% of European venture capital. That was about $1 billion less than what the financial services company had raised.
Web3 funding recovers slightly from extreme lows
Perhaps no sector epitomizes the recent venture funding boom and subsequent downturn more than Web3.
The sector, which loosely includes blockchain, cryptocurrencies, and other decentralized internet technologies, will continue to grow in 2021 and 2022, with investors offering huge funding rounds and eye-popping valuations on a weekly basis. It has become a darling of the high-tech sector.
But Web3 startups raised less than $1.9 billion in 346 deals in the first quarter, a fraction of the roughly $10 billion in investments in the first quarter of 2022, according to Crunchbase data. Part of it.
Still, Web3’s funding has declined so far, so much so that the most recent quarter was actually an increase from Q4 2023, when startups in the space raised just $1.2 billion in 263 deals. That means you are doing it. This also marks the first quarterly increase in Web3 venture funding since his fourth quarter of 2021.
– Gené Teare, Chris Metinko, and Joanna Glasner contributed.
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Illustration: Dom Guzman
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