Startup investors held tight to their portfolios in the first quarter of 2024, Crunch Base data shows. There were big exceptions – some AI, healthcare, energy and robotics startups received huge investments, among others – but overall the tone was cautious at the start of the yr.
To break it down even further, let’s look at 11 charts based on the latest Crunchbase data that show the state of the startup world in early 2024.
Startup investors around the world remain cautious
Investment in startups in the first quarter globally was the second worst quarter since 2018, based on Crunchbase data. While total investment has improved since the fourth quarter of 2023, this is only because that quarter was the worst in six years.
Funding was similarly limited in North America, the world’s largest startup investment market, where about half of all enterprise capital went to the region.
Still, investors made big investments in some AI and healthcare startups, helping these two sectors lead in terms of total global investment in the first quarter.
Early stage funding has actually increased
Investment in early-stage startups around the world actually increased in the first quarter despite an overall decline in funding, Crunchbase data shows.
Total funding at this stage was roughly $29.5 billion, up 6% year-over-year, largely driven by large Series B funding for artificial intelligence, electric vehicles and green energy.
Seed and angel investments also held up higher than late-stage investments, providing hope that as the economic recovery continues, a solid class of funded junior corporations will emerge, able to expand.
A16z is emerging as a leader in the latest financing environment
Late 2023 enterprise capitalist Marc Andreessen written “A techno-optimist’s manifesto,” a long, impassioned, and somewhat rambling defense of the tech sector.
Either way, given the investment activity, his company appears to be quite optimistic at the moment: Andreessen Horowitz (a16z) participated in 27 post-seed financing rounds in the first quarter of 2024 – greater than any other enterprise capitalist – based on Crunchbase data.
The runner-up for the title of most energetic investor of the first quarter is the accelerator Y Combinatorwhich has supported 18 known post-seed deals (in addition to quite a few other seed rounds) and Generic catalytic converterwith 15 rounds.
Notably, A16z was also the most energetic startup investor in 2023.
Cybersecurity: Not recession-proof, but resilient
Cybersecurity is sometimes described as virtually recession-proof. After all, hackers don’t take a break just because the economy is struggling.
While this is not entirely true – investment in cyber startups in 2023 was only a third of what was achieved during the VC boom in 2021 – funding for this sector has proven resilient in comparison with other industries.
Venture capitalists spent $2.7 billion on 154 deals backing cybersecurity startups in the first quarter, Crunchbase data shows, marking the industry’s best quarter of funding in three quarters.
Investors who spoke to Crunchbase News said the sector continues to see strong interest, especially in latest technologies equivalent to artificial intelligence.
“The widespread adoption of generative artificial intelligence technologies, coupled with recent geopolitical conflicts such as the wars between Russia and Ukraine and Israel and Gaza, have increased the frequency and sophistication of cyberattacks,” he added. Gill Raananfounder and partner in the company Cyberstarts– he said in an earlier interview.
Asian financing stays moderate despite China’s gains
Despite a slight increase in global enterprise investment, enterprise capital funding for Asia-based startups declined again in the first quarter.
Total enterprise funding in the region fell to $17.3 billion in the first quarter, down 4% from the fourth quarter of 2023 and down 8% year-over-year. This sum represents the lowest funding amount in the Asia region in a single quarter since the fourth quarter of 2016.
However, investment in Chinese startups actually increased in Q1, helped by several huge rounds. Chinese startups raised $1.1 billion in the first quarter, up 9% from the previous quarter and 14% from the first quarter of 2023, based on Crunchbase data. The country stays by far the largest startup market in the Asian region.
As U.S.-China relations remain sensitive, investment in Chinese startups in recent years has been led by investors from that country reasonably than U.S. VC firms.
Large orders for corporations based in China in the first quarter went to: electric vehicle manufacturer Zhija’s automobile, which raised $1.1 billion in Series B funding; launching artificial intelligence (*11*)Moonshot AIwhich in a funding round led by. raised over $1 billion Alibaba Group and HongShan (formerly Sequoia, the capital of China); and a low-orbit satellite broadband company Yuanxin satellitewhich raised $943 million in Series A, led by: China Development Bank.
Latin America’s financing scene is struggling – with a major exception
Funding for Latin American startups also hit its lowest level in years last quarter. Both dollar investments at individual stages and the number of transactions declined.
Crunchbase data shows that in the first quarter of 2024 in Latin America, investors committed just $579 million to seed-to-growth rounds. This represents a decline of 17% in comparison with the year-ago level and a decline of 39% in comparison with the previous quarter.
The last quarter was a particularly sharp decline from the region’s funding peak nearly three years ago. At its peak, investors poured greater than $7 billion into Latin American corporations in a single quarter of 2021.
However, one Latin American country has bucked this trend. Investments in Colombian startups greater than tripled from the previous quarter, reaching $188 million, mainly due to large rounds for Bogota-based fintechs Symmetrical AND Bold.
Europe stays (mostly) stable
Meanwhile, in Europe, startup funding has not increased significantly, but it has not decreased significantly either.
Venture investments on the continent reached $11.8 billion in the first quarter of 2024, up barely from the fourth quarter of 2023 and down lower than 10% from the first quarter of 2023, based on Crunchbase data.
Overall, around 18% of global enterprise capital was allocated to European start-ups in the first quarter.
The leading sectors for financing in Europe were financial services, healthcare and energy. Artificial intelligence corporations have raised $1.4 billion, or about 12% of European enterprise capital. That’s about $1 billion lower than financial services corporations raised.
Web3 funding is rebounding somewhat from epic lows
Perhaps no sector exemplifies the recent enterprise finance boom and then decline quite like Web3.
The sector – which loosely includes blockchain, cryptocurrencies and other decentralized web technologies – has been the tech sector’s darling in 2021 and 2022, with investors handing out massive funding rounds and eye-popping valuations on a weekly basis.
However, based on Crunchbase data, Web3-related startups raised lower than $1.9 billion in 346 deals in the first quarter – a fraction of the roughly $10 billion invested in the first quarter of 2022.
Still, because Web3 funding has declined so far, the latest quarter actually represents an increase in comparison with the fourth quarter of 2023, when startups in the sector raised just $1.2 billion across 263 deals. This also marks the first quarterly increase in Web3 enterprise capital funding since Q4 2021.