Q3’24 Venture Pulse Report – Global trends

Global VC investment during Q3’24 remained relatively subdued, in keeping with recent trends. The Americas accounted for the largest proportion of VC funding globally, driven by a $1.5 billion raise by US-based Anduril Industries, a $1 billion raise by US-based Safe Superintelligence Inc, and a $900 million raise by Canada-based Clio. Asia attracted the second largest share of VC funding among the key regions, driven by a $788 million raise by Mynt, followed by a $688 million raise by Baichuan AI and a $415 million raise by ICLeague — both in China — in addition to a $362 million raise by Singapore-based Silicon Box, and a $360 million raise by India-based Zepto.

Europe also saw a relatively quiet quarter of VC investment in Q3’24, although a number of AI-focused firms raised solid $100 million+ funding rounds. The largest deals this quarter included Germany-based Helsing ($484 million) and France-based gaming company Voodoo ($386 million). Space-tech also received investor attention as highlighted by top deals by Isar Aerospace ($279 million) in Germany and D-Orbit ($166 million) in Italy.

At the end of Q3’24, the number of early-stage unicorn companies — companies with valuations over $1 billion — has already exceeded the number seen during all of 2023. This large uptick despite the current uncertain macroeconomic and geopolitical environment has been propelled almost entirely by activity in the AI space, with a number of early-stage AI companies obtaining unicorn valuations on their first major raises. While the number of new unicorns remained well below levels seen during the outlier years of2021 and 2022, it highlights the focus on the AI sector and how VC investors are pouring money into the space even as they take a far more cautious approach to their other investments.

Globally, AI continued to attract the largest share of VC investment, accounting for the largest deals in the Americas, Asia, and Europe during Q3’24. While core AI companies continued to garner strong levels of investment — including Safe Superintelligence ($1 billion) in the US, ad Baichuan AI ($688 million), Moonshot AI ($300 million) in China and Sakana AI ($200 million) in Japan — industry applications of AI also saw robust interest from VC investors. During the quarter, AI-powered defense-tech companies raised large rounds, including US-based Anduril Industries ($1.5 billion) and Germany-based Helsing ($484 million). China also saw AutoAI, a startup focused on enabling automotive companies to embed AI into their vehicles, raise $107 million in Q3’24.

VC investors globally also showed interest in startups with offerings tangential to the AI space, including companies looking to reduce the energy requirements associated with many AI solutions.

Defense-tech attracted a number of large raises in Q3’24, including US-based Anduril Industries — a developer of autonomous weapons systems — and Germany-based Helsing — a firm that uses AI to improve weapons capabilities and decision making. Ongoing geopolitical tensions and conflicts have likely driven interest in the defense-tech space. While VC investors have historically shied away from making investments in the sector, growing interest from governments in software and other non-hardware solutions related to defense has led some VC investors to view the space as a good investment opportunity.

While VC investment and exit activity will likely remain relatively soft in Q4’24, particularly until after the US presidential election in November, there is a growing sense optimism that exits activity could start to rebound in 2025. M&A activity could be first out the gate as VC investors look at deals in light of interest rate cuts in a number of jurisdictions.

AI is expected to remain a very hot area of investment, although there could be a shakeout as investors increasingly focus on companies able to show how they are using AI to generate real value. Regulation of AI activities will also be a major area to watch over the next several quarters, as governments and regulators increasingly prioritize the need to develop guardrails for AI activities, whether they are focused on safety, privacy, or appropriate use.

While alternative energy solutions have garnered strong interest from VC investors over the last two years — although total investment has fallen off over the last couple of quarters — interest could spike further over the next year given how global energy demand is skyrocketing and predicted to outpace supply.