Q3’24 Venture Pulse Report - Americas

During Q3’24, the US Federal Reserve cut its interest rate for the first time since 2020, while the Bank of Canada cut its interest rate twice following an initial cut late in Q2’24. Even as other jurisdictions made cuts, however, Brazil’s Central Bank raised its interest rate for the first time in two years in order to rein in inflation.¹

VC investment in Canada was incredibly strong in Q3’24, with investment rising above all but the quarterly totals seen in 2021 and early 2022. The impressive quarter was driven by three $100 million+ megadeals, including a $900 million raise by legaltech Clio, a $500 million raise by Gen AI-focused Cohere, and a $281 million raise by Tenstorrent focused biotech Borealis Biosciences. AI and health and biotech continued to see a lot of interest from VC investors in Canada given their strong innovation ecosystems. Other sectors also attracted sizeable deals this quarter; last mile delivery logistics platform UniUni raised $70 million, while advanced energy solutions company UgoWork raised $51 million and carbon capture technology company Svante raised
$50 million.

VC investment in Brazil was very soft in Q3’24, driven in part by uncertainties related to the significant tax reforms being undertaken in the country — the first major reforms in decades. Stubbornly high inflation, the country’s central bank’s decision to raise interest rates, and the upcoming election in the US likely also contributed to the low volume of VC deals activity during the quarter.

Brazil-based startups have struggled a lot in recent quarters, with many startups closing or conducting large layoffs in the face of pressure to achieve sustainable cash flows. While this has been incredibly difficult for the VC market, the companies that have survived have proven their strength and resilience. This could help them attract fresh rounds of investment and later stage investments heading into 2025. However, in spite of the headwinds, Brazil continued to see some traction in the fintech space, as highlighted by QI Tech’s massive $250 million round this quarter. There is some optimism in Brazil that once the current uncertainties dissipate late in Q4’24 or in Q1’25, that the volume of funding will pick back up.

VC investor interest in cybersecurity solutions strengthened in the Americas during Q3’24, with raises by a wide range of companies, including private content network and risk management firm Kiteworks ($456 million) and email security firm Abnormal Security ($250 million). The growing focus of investors on cybersecurity likely reflects both heightening concerns about cyberattacks, including more realistic phishing scams and Gen AI powered attacks, in addition to the increasing complexity of regulatory compliance obligations. The SEC’s cybersecurity incident reporting requirements, for example, now require public companies to report on cyber incidents.² This has likely sparked interest in cybersecurity solutions, particularly from corporates looking to upscale their cyber protection infrastructure.

Health and biotech continued to see strong investment in the Americas, particularly in the US and Canada. During Q3’24, US-based surgical care optimization platform Caresyntax raised $310 million, while Canada-based developer of xRNA medicines for kidney diseases Borealis Biosciences raised $150 million. The introduction of AI to biotech solutions has amplified VC investor interest in the space, given its potential ability to speed up development and analytics processes. Health and biotech is also gaining attention from investors in Brazil, although investment levels have been quite small to date compared to other jurisdictions in the region.

VC investment in the Americas is expected to remain relatively steady quarter-over-quarter, particularly in the US and Canada. AI will likely continue to see large investments, in addition to areas like health and biotech and cleantech. While cybersecurity investment has taken a backseat to AI in recent quarters, it could also see investment increase over the next few quarters as companies look to stay ahead of potential cyber threats.

In Brazil, there is significant optimism that VC investment will rebound over the next couple of quarters as the government’s tax reforms are completed and macroeconomic factors stabilize.