VC market experiences broad decline in Q3 as deal volumes drop across US, Europe and Asia

The venture capital market continued to struggle in the third quarter of 2024, with the number of deals falling to pre-2021 levels, according to a first look at the quarterly PitchBook-NVCA Venture Monitor report released early Thursday.

Starting with the U.S., the number of VC deals fell quarter-over-quarter for the first time in a year, coming in at 3,777. While the median valuations remained high, the total deal value in the quarter was the lowest of the year and could have been worse, as the figure was slanted by a few outsized rounds.

Although the deal value in the quarter rose from 2023, the level remains below 2021. The report does note, however, that strong companies still managed to raise large deals in the quarter to weather the overall market slowdown.

Exits were also slow in the quarter, with only 10 companies going public and $11.2 billion in total exit value created during the quarter. Because of the ongoing initial public offering drought, companies are sticking to the private market and turning to distributions from limited partners, such as institutional investors, to raise funds instead.

With one quarter left in the year, the report notes, 2024 is currently on pace to be the second-slowest year recorded since PitchBook-NVCA Venture Monitor has been publishing data for VC firm funding. Only $64 billion has been raised across U.S. VC funds as a result of low distributions and poor returns in recent years. While roughly in line with figures in 2020, large numbers of private, VC-backed companies are straining capital resources.

Across the pond, Europe isn’t seeing any success either in the VC field, with European VC activity dropping quarter-over-quarter. While deal counts were only slightly down over the second quarter, fewer deals are closing as investors remain cautious.

In one bright spot, Europe is seeing more exit activity, with the third quarter alone surpassing 2023 overall and hence creating optimism in the market. Fundraising, however, had remained last in Europe compared to 2023, with macroeconomic conditions making fundraising difficult.

There are no bright VC figures in Asia, either, with deals coming in at $14.9 billion in the third quarter, the lowest level since the first quarter of 2017. The deep decline has been driven by funding flowing out of China, with other markets, including India and Southeast, also lagging. The total deal count in Asia came in at 2,143 in the quarter, less than half of the fourth-quarter 2021 high of 4,704.

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