I like looking at venture capital (VC) activity as a barometer for economic conditions and investor sentiment. Venture capital statistics paint a picture of investors’ appetite for risk and thirst for innovation.
I haven’t personally dabbled in venture investing to date—I’m not sure I have the stomach for it. But I still like to understand the venture capital landscape as a useful measure of market conditions, which informs my other investing activity.
What do the current venture capital statistics say about the current state of play?
Key Takeaways:
- VC investment activity has cooled markedly since 2021 but remains robust.
- Seed/Start-up stage VC investments ramped up in 2024 after stagnating for two years, but the exit market remains challenging.
- Cutting-edge technologies such as AI and robotics, healthcare innovations, and enterprise software/SaaS continue to drive VC interest, especially in North America
Venture Capital Statistics Show Modest Growth
Venture capital remains a substantial part of the private investing ecosystem. In the U.S. alone, there were 3,417 active VC firms at the beginning of 2024. U.S. Venture firms closed 13,608 VC deals in 2023, totaling $170.6 billion in total deal value.
Image source: Dealroom.co
VC firms remain strong and capable of new fundraising, raising $66.9 billion across 474 funds in 2023.
America’s VC firms had $1.21 trillion in total assets under management (AUM) by the end of 2023, and sat atop $311.6 billion in dry powder (uninvested capital). The median fund size is $35.4 million; the largest fund raised in 2023 was $4 billion.
In Q1 2024, venture funding increased by 14% over the previous quarter, with just over 3,200 VC-backed deals completed in the U.S. and Canada. Q2 and Q3 maintained similar rates of VC funding, down slightly quarter-over-quarter in Q2 and up 4% in Q3.
Globally, Q3 2024 saw modest gains in worldwide venture capital funding: up 2% from the $94 billion invested across 4,500 deals in Q2.
Image source: Global Venture Capital Trends | Bain & Company
VC Investment Stage Breakdown—From Seed Fundraising to Exits
Venture capital investments can be split roughly into three stages. Separating VC activity by pre-seed/seed-stage investments, growth-stage deals, and late-stage deals helps gives a more complete picture of the overall venture investing landscape.
Seed/Startup Stage
Pre-seed and seed-stage VC investments totaled about $15 billion in 2023, down from $24 billion in 2022. But throughout 2024, startup funding from VC investments has taken off, showing strong growth as investor appetite for risk assets increases.
Growth/Breakout (Early) Stage
At the tail end of 2023, early-stage deal value hit a multiyear low, with $39.5 billion invested across 5,421 deals. Deals for businesses in this funding stage showed strong quarter-over-quarter growth to start 2024 but declined sharply in Q3.
Scale-up/Late Stage
Late-stage deal activity continued a downward trend through most of 2023, with $80.4 billion invested in 4,305 deals in Q4. It continued to struggle through the first half of 2024 before showing some life in Q3 2024, thanks to some high-value rounds in AI and semiconductors.
Image source: Global Venture Capital Trends | Bain & Company
Exits
The exit market remains challenging, with subdued activity throughout 2023 and 2024. This is reflected in both historically low exit volumes and declining exit values. Only 128 U.S. companies completed an initial public offering (IPO) in 2023, about a quarter of the number of IPOs in 2021.
VC-backed companies waiting longer to exit impacts investors waiting for a liquidity event. Holding periods are the longest they’ve been in a decade.
This environment has led to a growing backlog of mature VC-backed companies ready for an exit. There’s cautious optimism that improving market conditions in 2025 could open the floodgates for M&A or IPOs to provide VC investors their exits.
Trends and Outlook for Venture Capital
Wading through VC statistics may not be anyone’s idea of a good time, but they reveal some prominent trends worth recognizing. We can also interpret the recent statistics from the past couple of years to get a sense of the near-future outlook for venture investment.
Trends in VC Funding & Investment Activity
The most recent statistics available at the time of this writing included the first three quarters of 2024. These three quarters were the first to show growth in global VC activity after two years of notable decline.
Recall that 2021 was a record year for VC investments: $345 billion invested into 19,025 VC deals in the U.S. alone.
By 2023, VC activity had declined to around $170.6 billion invested in 15,766 deals the U.S.—a level well below the 2021 peak, but still above historically average.
The modest but consistent growth in VC in 2024 suggests a slow and steady recovery is underway.
Geographic Trends
Around the world, the trajectory of VC investment varies a great deal in different developed economies.
By dollars invested, the U.S., China, and the UK remain the top 3 economies for VC through 2024.
India showed the fasted growth in VC activity in 2024, up 31% YoY. The U.S., Canada, and Germany all enjoyed an uptick in VC investment. Most of the other largest countries for VC experienced declines, particularly throughout Asia.
Image source: The State of Global VC | Dealroom.co
The U.S. remains the #1 economy for venture investing by a wide margin. Silicon Valley in the San Francisco Bay Area remains the primary global hub for VC funding in the tech space, with New York City, Boston, London, and Los Angeles rounding out the top 5 cities for venture funding.
Denver, San Diego, and North Carolina’s Research Triangle enjoyed substantial growth in VC activity in 2024. The amount of VC investment in each of these hubs more than doubled over the previous year.
Sector Trends
The trends in investment activity indicate which sectors attracted the most VC interest in 2024. Investors continue to express a strong appetite for backing innovative technologies, valuable business services, and clean energy solutions.
Enterprise software earned the most VC investment in 2024, followed closely by the healthcare and biotech industry.
Image source: The State of Global VC | Dealroom.co
Areas showing the strongest VC activity include artificial intelligence (AI), software-as-as-service (SaaS), cleantech, fintech, healthcare, and defense tech.
To nobody’s surprise, artificial intelligence (AI) continued to draw substantial investments, with particular interest in machine learning algorithms, natural language processing tools, and AI-driven applications. The pace of VC investment in the AI sector accelerated into 2024 as confidence in and familiarity with the technology grew.
Cleantech and sustainability remain a high priority in global VC, with areas like electric vehicles, renewable energy and battery technology, decarbonization technologies, biodegradable packaging and alternative meat products drawing substantial venture funding in 2024.
Simmering geopolitical risks have driven renewed interest in defense tech, with $34.3 billion in VC investments in the space in 2023 and around another $40 billion in 2024.
SaaS has grown to a nearly 50% share of all global venture capital investments, while e-commerce startup types have shrunk to just 10% of VC investments.
Image source: The State of Global VC | Dealroom.co
Conclusion
The current venture capital statistics tell a story of continued uncertainty and depressed VC activity since 2022-23, but signs of improvement that merit cautious optimism.
A less speculative risk environment and higher interest rates have forced investors to become more selective about the companies they back. VC investors increasingly seek companies with a solid foundation and demonstrated potential, with less appetite for pure speculation. This selectivity also appears in the current trends in M&A and the most recent search fund statistics.
Even in the face of uncertainty, VC investors continue to adapt and invest in innovation and transformative young businesses. Entrepreneurship in America continues unabated, backed by venture capital that fuels the growth of new companies, technologies, and ideas.
Updated: January 15, 2025.