Q1’24 Venture Pulse Report – Global trends

VC investment in the Americas well ahead of Asia and Europe

The Americas attracted the largest share of VC investment globally in Q1’24 ($38.2 billion across 3,205 deals), driven primarily by investment and deals activity in the US ($36.6 billion across 2,882 deals)), including a $4 billion raise by Anthropic, a $704 million raise by battery materials company Ascend Elements, a $675 million raise by Figure AI, a $425 million raise by asthma-focused biotech Areteia Therapeutics, and a $400 million raise by Mirador Therapeutics.

Asia attracted the second highest level of VC investment this quarter ($18.9 billion across 2,305 deals), led by three big raises in China — a $1.1 billion raise by EV company IM Motors, a $1 billion raise by AI-focused YueZhiAnMian, and a $940 million raise by Yuanxin Satellite. Europe saw VC investment increase slightly, reaching $17.9 billion across 1,798 deals; the largest deals in the region included the $5.2 billion raise by Sweden-based green infrastructure company H2 Green Steel and a $431 million raise by UK-based neobank Monzo, followed by a $415 million raise by Mistral AI in France, a $389 million raise by Netherlands-based grocery e-commerce company Picnic, and a $334 million raise by France-based EV firm Electra.

AI remains big driver of VC investment globally

The frenzy of interest in AI-driven solutions continued in Q1’24, with some of the largest deals of the quarter occurring in the space, led by the $4 billion raise by Anthropic in the US. Other big deals included YueZhiAnMian (China), Figure AI (US), Lambda (US), MiniMax AI (China), and Mistral AI (France).

Generative AI remained a particularly hot area of interest for VC investors, both in terms of large language model driven solutions and solutions aimed at building generative AI capabilities into business verticals in order to drive real results and efficiencies. Corporates continued to be particularly active in the AI space; Microsoft made a number of AI moves during the quarter, forging a new partnership with France-based Mistral AI and hiring one of the cofounders of AI firm Inflection.

Global corporate VC-participated investment dips to near five-year low

Corporate VC-participating investment dropped from $40.8 billion in Q4’23 to $37.3 billion in Q1’24 — the lowest level of CVC investment since Q3’19. The Americas was the only jurisdiction to see an increase, with CVC rising from $18.7 billion to $20.1 billion quarter-over-quarter in the region. In Europe, CVC held relatively steady at $6.6 billion, while in Asia, CVC fell from $13.7 billion to $10.4 billion. The overall decline in CVC investment reflects a number of factors, including the challenging economic environment which has driven many corporates to focus on shoring up their core businesses and improving their operational efficiencies. In some jurisdictions, including Latin America, corporates have also increased their focus on driving innovation internally.

Trends to watch for in Q2’24

Heading into Q2’24, the IPO market globally will be one of the major areas to watch. Should there be a few successful IPO exits to start the quarter — and signs that other companies are readying for an exit, VC firms could begin to see pressure from LPs to open their funding taps. Small scale M&A activity could also pick up in many regions of the world as companies that have not been able to raise additional funding become targets for distressed M&A, the acquisition of intellectual property, or acquihires.

AI is expected to remain very attractive to VC investors globally in Q2’24, although investments will likely begin to take on a more narrow field of focus. Industry focused AI solutions will likely become a key area of for VC investment, such as solutions aimed at improving the efficiency of financial services, law, and real estate firms. Cleantech is also expected to remain a strong area of investment for the foreseeable future, given both the increasing regulatory requirements, particularly in Europe, and the growing number of jurisdictions prioritizing ESG related actions.

Ongoing antitrust regulatory proceedings in both the US and Europe will be something to watch for over the next few quarters, with regulators both in the EU and the US.