Global venture capital (VC) investment plummeted to $70.1 billion in Q3 2024, marking a seven-year low from a high of $95.5 billion in Q2, as highlighted by KPMG Private Enterprise’s latest Venture Pulse report.
This steep decline is attributed to geopolitical uncertainty, an exit drought, and the upcoming U.S. presidential election. Despite these challenges, artificial intelligence (AI) continued to dominate, representing six of the top ten largest deals globally this quarter.
India offered a contrast to global patterns with a strong $3.6 billion in VC investments, primarily in consumer-focused sectors, unlike the B2B focus seen elsewhere in Asia. Fintech also drew significant interest, though traditional banks’ own fintech offerings have tempered investor enthusiasm. Nitish Poddar, Partner and National Leader, Private Equity, KPMG in India, commented, “As expected, there has been a bounce back in activity led by consumer-focused sectors. This trend is expected to continue, with investors backing businesses aligned with profitability and customer engagement.”
Global shift
In a sector breakdown, the Americas led VC activity, though regional investment fell to $41.4 billion in Q3 from $58.6 billion in Q2. Asia saw a drop from $18.5 billion to $15.6 billion, while Europe decreased from $17.9 billion to $12.5 billion. “AI investments drove the lion’s share of VC investment activity in Q3’24,” noted Conor Moore, Global Head, KPMG Private Enterprise. “But even within AI, a lot of deals were somewhat smaller than we’ve seen in recent quarters, reflecting a shift toward targeted industry solutions. Defence-tech was also a notable winner, alongside biotech.”
The report also highlighted a slowdown in global corporate VC activity, which dropped to $35.2 billion from $54 billion quarter-over-quarter. Global exit values fell to $39.2 billion from $52.9 billion, though Asia defied the trend, with exit activity rising from $11.2 billion to $18.2 billion. Fundraising activity lagged as well, totalling $143.1 billion at the end of Q3, putting it behind last year’s pace.
With the US election approaching, VC investment is likely to remain cautious through Q4 2024, with AI and defence-tech expected to attract ongoing interest. Many investors are hopeful for a rebound in exit activity, signalling potential growth for the global VC market in 2025.
