Q2’24 Venture Pulse Report – Americas

Energy and cleantech continuing to gain interest and traction in Americas

During Q2’24, cleantechs continued to attract attention from VC investors in the Americas, with a growing number raising funding to get up and running and test proofs of concept. Attracting later stages of funding has been more of a challenge, particularly in the US, with some cleantechs struggling to obtain the later stages of funding needed to scale their offerings to the point of mass production.

In Brazil, interest in the renewable energy and cleantech space has been growing slowly but steadily among investors, particularly in areas like decarbonization and alternative energy generation. As market conditions improve, the energy sector in Brazil could see increasing investment in this space, particularly in areas related to hydrogen energy.

Canada sees VC investment pick up in Q2’24

There was some optimism in Canada’s VC market during Q2’24, with total investment rising to $1.3 billion, although it remained relatively soft compared to historical highs and to the same quarter in 2023 ($1.9 billion). Renewable energy continued to attract interest during the quarter, with Quebec-based electric charging station company Flo raising $100 million.¹

During Q2’24, the Bank of Canada cut its key interest rate by 0.25% — the first rate cut Canada has seen since Q1’20; while a positive sign that market conditions may be improving, further interest rates cuts will likely occur in a very measured way rather than with any rapidity.

VC investment in Brazil more than doubles in Q2’24

VC investment in Brazil rose to $816.8 million in Q2’24, the highest level seen in Brazil since Q3’22.. A $250 million raise by financial services infrastructure company QI Tech helped improve Brazil’s quarterly results; the substantial raise earned the fintech unicorn status, with a $1 billion+ valuation. A number of Brazil-based startups are struggling to survive, given the extended challenges that have permeated the VC market in Brazil over the past year and more. In order to survive, a number of startups have focused on obtaining alternative financing; in the B2C space, for example, some companies have attracted financing by leveraging the future cash flows generated by their customers.

Strong government support for AI innovation in Canada

During Q2’24, the Canadian government showed significant support for the ongoing development of the AI ecosystem in the country. In April, it announced $2.4 billion in AI-related funding, including $2 billion for a fund aimed at providing access to technical infrastructure and computing capabilities and funding to support the creation of an AI safety institute and an office of the AI and Data Commissioner to support enforcement of the proposed Artificial Intelligence and Data Act (AIDA).²

In April, Scale AI — an initiative funded by the Federal and Quebec governments — also announced $31.3 million in funding for twenty-two projects focused on incorporating AI into different industries.³

Trends to watch for in Q3’24

VC investment in the Americas is expected to remain relatively similar quarter-over-quarter, with AI and cleantech investment poised to remain hot in the US and Canada. In Brazil and Latin America more broadly, fintech will likely remain the biggest driver of VC investment heading into Q3’24, although investment in cleantech is expected to pickup slowly over time.

In the US, many eyes will be on the IPO market; with the US presidential election slated for November, any increasing IPO activity will likely materialize in Q3’24 before quieting again until after the election. In Brazil, all eyes will likely be on interest rates and the level of inflation heading into Q3’24 as even a small drop would likely be seen very positively by VC investors.