Q4’24 Venture Pulse Report – United States

Despite the significant uptick in deal value in the US, the total number of VC deals remained subdued during Q4’24. VC investors continued to focus on quality over quantity given the ongoing uncertainties in the market, including global conflicts and geopolitical tensions, the US presidential election which occurred mid-way through the quarter, and the ongoing lack of exits. 

Q4’24 was a banner year for multi-billion dollar VC deals in the US. Five companies raised VC rounds at or above $4 billion, including Databricks ($10 billion), OpenAI ($6.6 billion), xAI ($6 billion), Waymo ($5.6 billion), and Anthropic ($4 billion). All five companies are major players in the AI space, with OpenAI, xAI and Anthropic focused primarily on generative AI and Waymo focused on using AI to enable autonomous driving capabilities. 

In 2022 and 2023, a good number of late stage investments in the US were lifeline investments aimed at helping companies survive a period of significant uncertainty and the pushing out of the IPO market opening. In Q4’24, after a period of significant cost-cutting and looking for efficiencies, a number of later stage startups have turned their attention back to growth — raising fresh funding rounds to drive their short-term growth, improve their balance sheets, and position themselves for an IPO in 2025 or 2026.

The combination of interest rate cuts, the easing of some uncertainty in the wake of the presidential election, the fact a number of tech companies have performed very well post-IPO in recent months — including Reddit, whose stock price rose 240%, and Rubrik and Astera Labs, whose stock prices have both climbed more than 100% — and even the excitement of VC investors for almost all things AI, has helped spark optimism for the IPO and M&A markets in the trailing months of 2024.¹ A significant number of companies are ready to go once the IPO door swings fully open; the big question is more a matter of exactly when in 2025 that will happen.

Over the course of 2024, CVC investment in the US remained quite solid, particularly compared to CVC investment in other regions of the world. Interest in AI likely had a role to play in this resilience, with many large US corporates choosing to make sizable investments in innovative and agile AI model and infrastructure companies rather than seeking to drive AI innovation in-house.

Heading into Q1’25, VC market participants will be watching the exit market in the US, with growing expectations that IPO activity will pick up significantly. While a major rise in IPO exits right out the gate may not be in the cards given the uncertainty associated with the forthcoming administration changeover, Q1’25 could see IPO filings and related activity heating up as companies position themselves for exits in Q2’25 and Q3’25. M&A activity is also expected to pick up in Q1’25, particularly if the US Federal Reserve continues to make cuts to interest rates.

While AI is expected to remain the hottest ticket for VC investors in the US during Q1’25, a number of other sectors are also expected to see solid investment, including defense tech, cybersecurity and life sciences. Crypto could also see a resurgence in interest from VC investors given the change in administration