Global VC investment rose 5.4% to $368.5B in 2024, but performance fell 17% | NVCA/Pitchbook

All around the world business investment will rise to $368.5 billion in 2024, up 5.4% from $349.4 billion a year earlier, according to the first look at Q4 2024 Pitchbook – NVCA Venture Monitor report.

But the number of international jobs in 2024 fell 17% to 35,686 from 43,320 last year in 2023.

Global transactions for 2024 were down 50.9% from $751.5 billion in the peak year of 2021 and down 37% from 57,068 in 2021 estimates.

Artificial intelligence is a big part of the picture now. There were 8,343 AIs worldwide in 2024, down 3.6% from 8,661 in 2023 and down 16.6% from 10,007 in 2021.

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

AI and machine learning accounted for 35.7% of global value in 2024, up from 24.7% in 2023. And AI and machine learning accounted for 23.4% of global value in 2024, up from 20% in 2023. In 2021, AI it was 18.7 % of the world value and 17.5% of the world trade volume.

Q4 numbers around the world

Globally in Q4, the Asia Pacific market has been struggling for the past few years, which has not changed in 2024, Pitchbook VC analyst Kyle Stanford said.

Compared to Europe and the US, the amount of dry powder that was produced in different markets in APAC was less, which again forced the action last year. China, which accounts for almost half of APAC’s annual jobs, has seen a decline in jobs, due to the country’s economic problems, as well as conflicts with the US government, which have reduced jobs and US capital. companies. Only 20.4% of the calculations were done in Asia, the lowest share in the last decade.

Globally, AI has continued to dominate headlines and investment for investors even though some feel that the investment profession is not sustainable in the long term. Whether this is true or not is a question at this point.

More than half of all VC investments worldwide during Q4 went to a company focused on AI. It is true that the number was greatly affected by the likes of OpenAI, Databricks, xAI, and other well-known companies that raise to sell shares and invest in chips and energy consumption, but the most important factors are the level of capital availability for AI in comparison. and other sectors, said Stanford.

The share of businesses going into the AI ​​industry has steadily increased over the past few years as large companies and investors move to capitalize on the expected next-generation technology, he said.

“VC-backed exits have not been strong in APAC’s history, even though many markets are still too small to have a good exit environment,” he said. “The lack of exits in many sectors has caused many foreign investors to be weary of the number of jobs that the market has fallen. Japan has become less important in accounting, as the country’s many IPOs have contributed to the return of investors. In 2024, 19% of the exits will be managed by VC in the world the rest of the world came from Asian companies.”

Revenue has slowed globally, as new contracts fell by 20% YoY. The lack of outflows has had a significant impact on investment in Asia as LPs have been reluctant to repeat their commitments at this time. 2024 was the lowest year for new deals since 2018, and was the lowest year for closed-end funds in the market in the past decade. North America and Europe also struggled to secure new investment commitments.

Q4 US sales

US dealmaking remained strong in the fourth quarter of 2024 from a statistical perspective, and increased slightly by 3.7% compared to the previous year, Pitchbook and NVCA said. In the quarter, AI sales accounted for nearly half (46.4%) of total US sales value.

Stanford said it appears to be the opposite of what has happened in the market over the past few years, but it reflects the stability of some trading machines from the past few years.

“What has happened is that the amount of dry powder from the high income years of 2021 and 2022 has caused many investors to work in the market despite the lack of returns,” Stanford said. “With the slow funding years of 2023 and 2024, we should see this strength start to erode as the fund goes through the balance sheet and can’t find the next fund.”

Artificial intelligence continues to be the talk of the market, and will drive nearly the most VC dollars in 2024, he said. OpenAI, xAI, Anthropic, and others have resembled small businesses, and appear to be operating in a different financial environment than many VC-backed companies that continue to struggle with limited access to capital, Stanford said.

But the lack of output remains an issue for the business market, even if the outlook is optimistic, he said. Only $149.2 billion in exit was made in 2024, mostly from a few IPOs. Unicorns, which account for two-thirds of the US VC market value, have held firm as private equity firms, making it difficult for investors and minority partners to run out of shares.

Mergers and acquisitions were also “quiet in 2024,” with a few big things to note, Stanford said. A favorable buying environment in 2025 could set the stage for a renewed M&A market, especially if the economic slowdown can be successfully managed, he said.

In the US, fundraising was dominated by large, established companies. Thirty companies accounted for more than 68% of the total revenue in 2024. This is a trend that has been going on for the past few years, but it reached a breakthrough last year, said Stanford.

Many up-and-coming managers who made money during the ZIRP period in the VC market were not able to return the money, and have problems with losses due to the price changes that occurred during the market. Without a track record to speak of, many companies are finding it a tough market to raise new commitments from LPs, Stanford said.

European VC market

In Europe, the value of VC contracts showed a slight decrease, while the volume of sales decreased by 16% compared to the previous year, said Pitchbook analyst Nalin Patel, since the most cautious position was shown in 2024.

European activity declined in previous financial sessions, mostly vertical, and several areas such as a strong financial market emerged.

He said AI would drive a quarter of the region’s value in 2024, accounting for just over 23% of the economy. The large, traditional transactions that resulted from other markets did not occur at the same level in Europe, maintaining a high level of relative prices and valuations.

And he said the exit price was raised in 2024, mainly driven by the Puif series. Otherwise it was a quiet year for European VC-backed exits, especially in the list where companies avoid exits.

“We expect to exit in 2025 as the market improves,” Patel said.

Capital raised by VC funds from Europe was lower YoY in 2024 and remained below the level set in 2022. Funding numbers also decreased in 2024 down by almost one fifth compared to 2023. The lower numbers of funds and funds raised indicate less , but the main funds are closed in 2024.

Thoughts?

One way to see how much dry powder the companies have and whether the VCs have done well on their own is to see how they’ve made their investments. That’s when the news seems dark, or fixed now compared to the many days of 2021.

In 2024, 1,344 funds raised funds, from 2,333 in 2023 and a record of 4,283 in 2021. In terms of funds raised, 1,344 VCs raised $169.7 billion in 2024, down from $213.8 billion in 2024 2024 2024 2042. .