Global venture capital (VC) investment surged from $75.4 billion to $94.3 billion between the first and second quarters of 2024, fueled by nine $1 billion mega-deals, the second-largest total on record in a single quarter. While VC investment rose to a five-quarter high, deals volume fell to 7,691, the lowest level globally since Q3 of 2016. This low level of deals mirrors current market conditions including the high interest rate environment and geopolitical uncertainties.
AI leads global VC investment activity
According to the Q2 2024 edition of KPMG Private Enterprise’s Venture Pulse, AI accounted for over half of the 10 largest funding rounds globally as VC investors continued to show interest in the sector. These AI deals were led by a $8.6 billion raise by CoreWeave and a $6 billion raise by xAI—based in the U.S.
“AI is really propelling global VC investment right now. The bold promises being made in the AI space are quite audacious and offer a wealth of opportunities for AI applications across a variety of industries and operational activities,” stated Conor Moore, global head, KPMG Private Enterprise, KPMG International.
Regional investment trends
Regionally, VC investment increased in the Americas and Europe. The Americas saw VC investment climb to an eight-quarter high of $58.3 billion, while Europe experienced a rise from $13.9 billion to $17.8 billion. Conversely, VC investment in Asia dipped to a seven-year low of $17.4 billion, largely driven by a continued slowdown in China even as VC investment rose in a number of other jurisdictions, including India, Singapore, and Japan.
“Although AI is dominating investments this quarter, it’s not the only sector to thrive. Cleantech and alternative energy have continued to raise good funds as well,” added Moore.
AI accounts for over 20 percent of global VC funding
AI helped drive a surge in VC funding globally during Q2 of 2024, accounting for over 20 percent of all VC funding during the quarter. The U.S. secured the largest share of this funding, led by a $8.6 billion raise by CoreWeave and a $6 billion raise by xAI—both LLM focused AI firms. Data-focused Scale AI also raised $1 billion, while AI-powered biotech Xaira Therapeutics raised another $1 billion.
U.K.-based AI-focused autonomous driving company Wayve also raised $1 billion during the quarter, while France-based LLM company Mistral AI raised $651 million and Germany-based AI translation company DeepL raised $300 million.
In Asia, China-based Zunyuan Supermarket, an AI-powered retail company, raised $529 million during the quarter, while generative AI focused Zhipu AI raised $400 million.
Energy and cleantech remain strong
While AI was the clear winner in the global VC investment market during Q2 of 2024, VC investment in energy and cleantech remained quite strong, with all jurisdictions attracting $100 million+ megadeals in the space.
During the second quarter, China-based electric vehicle manufacturer Neta Auto raised $693 million, U.S.-based decarbonization-focused firm Nexamp raised $520 million, and U.K.-based long duration energy storage company Highview Power raised $382 million.
Read: China’s privately offered funds hit $2.76 trillion by end-September
Future oulook
The KPMG report expects global VC investment to remain relatively steady, with AI continuing to attract a large share of funding. Energy and cleantech are also expected to remain quite high on the radar of VC investors around the globe. The spate of larger deals could continue as VC funds face increasing pressure from their LPs to make investments. Fundraising activity by VC firms will likely remain very subdued until 2025. Once exit activity really picks up, fundraising will likely follow suit.
“The IPO market will be interesting to watch in Q3’24, particularly in the U.S. and Europe as there could be a brief window of opportunity for companies looking to exit. But with the U.S. presidential election slated for Q3’24, any real opening of the IPO market will likely hold off until the beginning of 2025,” added Francois Chadwick, partner, KPMG U.S.
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