PitchBook and the NVCA: US VC investments in Q1 2024 hit $36.6B, the lowest Q1 since 2018, across 2,882 deals, down from $51.6B across 4,026 deals in Q1 2023
Dean Takahashi / VentureBeat :
Context & Ripple Effects
This extends a multiyear reset in US venture activity: 2022 already brought a marked decline in dealmaking and exits, followed by a Q3 2023 low in US deal value and a weak full-year 2023.
The Q1 comparison also sharpens the contrast with the far stronger Q1 2022 funding market, showing that both capital deployed and the number of financings remain below the prior-cycle pace.
First-order effects
- US startups encountered a smaller financing market in Q1 2024, with both invested dollars and completed deals below Q1 2023 levels.
- VC firms deployed less capital across fewer new and follow-on transactions, reinforcing a more selective funding environment.
Second-order effects
- A sustained drop in deal count can make fundraising more competitive for companies without existing investor support, while investors gain more latitude to prioritize a narrower set of opportunities.
- The result corroborates the 2023 contraction in US venture investment, making a rapid return to the prior funding cadence less likely without a broader improvement in private-market conditions.
Third-order effects
- If lower activity persists, the venture market may increasingly concentrate capital among companies able to clear a higher financing bar, while more early-stage businesses take longer to raise or adjust spending.
- A longer reset would put greater weight on exits and liquidity as mechanisms for recycling capital, after the sharp 2022 decline in exit value constrained that cycle.
The trend: This is one data point in venture capital's post-boom normalization, marked by lower deal volume, more selective deployment, and greater concentration of available capital.