While enterprise capital funding appears to be stagnating, it seems that more and more startups are finding it easier to lift really large rounds of funding from investors – which appeared to dry up last year.
Rounds of $100 million or more – or megadeals – have exploded this year as U.S. startups have raised 115 such rounds by mid-May, in accordance with Crunchbase Megadeals management. This represents a 58% increase in comparison with the 73 mega deals made this time last year.
This is, of course, a far cry from the number of nine-figure rounds raised in 2021 and 2022, where nearly 280 rounds have been raised in each of those years so far.
However, considering the overall VC market in 2024, a large number of mega deals seem out of place.
Where does the money go?
One of the things that stands out about startups that have raised at least $100 million this year is the diversity of the sectors they got here from. From games (Epic games) for food delivery (Wonder) for quantum computing (PsiQuantum), investors continued to distribute large checks.
While most would think that such a list is dominated by AI, this is not the case. In fact, only 11 U.S.-based startups with a major AI classification have raised such rounds this year – for AI cloud infrastructure launches CoreWeave leader, after closing a $1.1 billion round led by Coat earlier this month.
Instead, biotech and healthcare dominate the mega-deal space, with the number of such startups rising to 38 this year.
This includes April’s biggest round: Xair therapy has come out of hiding and announced that it has secured over $1 billion in capital from leading investors Arch Venture Partners AND Foresite Capital — each incubated the company together. Xaira is the latest – but probably the most well-funded – startup attempting to use artificial intelligence models to seek out latest drugs.
This year, cybersecurity also saw its share of large rounds price $100 million or more, as 10 such raises went to startups in the industry. The largest was a cloud security startup Wizardwhich recently raised $1 billion at a $12 billion valuation, the largest cybersecurity round globally up to now.
Money flows in
As you may see from the rounds above – all of which occurred in the last 45 days – the pace of such large deals has clearly increased as the year has progressed. While January was slow, a $100 million-plus round was launched in February.
The numbers seem out of place in the current enterprise market, but they’ll probably be explained.
With overall enterprise volume holding regular or even declining barely, investors are clearly cashing in on possible other late-stage development deals, and even perhaps some early-stage deals. It would not be possible to extract enough money from a seed-stage deal to succeed in nine-figure rounds.
Nevertheless, the influx of megadeals this year seems to point out that investors are once again willing to position big bets on corporations where they see significant potential.
By the end of last year, investors had participated in 210 rounds price at least $100 million. It looks like VCs and strategies are poised to exceed that number this year.
Methodology
The numbers in this story come from the Megadeals Crunchbase board, covering the single industry assigned in each round. The board only tracks US-based startups.