Global enterprise capital financing reached $66.5 billion in the third quarter of 2024, Crunch Base data shows. This is a decline of 16% quarter-over-quarter and 15% year-over-year compared to the $78 billion invested in the third quarter of 2023.
We are now nine or ten quarters into the current decline in startup funding. Last quarter was the second quarter below the $70 billion mark since the starting of the current enterprise financing crisis, according to Crunchbase data. Outside of the fourth quarter of 2023 and the final quarter, you’d have to go back to 2017 to find one other quarter below $70 billion.
However, the third quarter numbers don’t necessarily indicate a further pullback in enterprise capital funding going forward, as we have seen large funds fluctuate from quarter to quarter this yr and last yr, which skews the overall numbers.
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Big drop in cartridge lead in the late phase
In the third quarter, the sharpest year-over-year decline was seen in late-stage financings and was most pronounced in the largest rounds of $500 million and above.
The concentration of enterprise dollars that went into the largest rounds – those valued at $100 million or more – was also barely lower in the third quarter, at about 46% compared with about 50% in the second quarter and third quarter of last yr.
AI diode
Artificial intelligence was the most invested sector in the third quarter in terms of dollars, with funding for AI startups reaching nearly $19 billion, or 28% of total enterprise dollars, according to Crunchbase data.
Funding for AI enterprises increased in 2024 in each absolute value and proportion of dollars invested. Last quarter was the second-largest quarter of AI funding since its mainstream launch OpenAI‘S ChatGPT in November 2022, second only to Q2 2024.
Artificial intelligence has overtaken healthcare and biotechnology, the second-largest sector, which has raised over $15 billion.
Hardware, the third-largest sector, raised greater than $13 billion. Meanwhile, financial services corporations raised nearly $8 billion.
The largest financing transactions in the third quarter amounted to over $500 million:
Late stage decline y/y
Late-stage financing was $34.7 billion, flat quarter-over-quarter and down from $46 billion in the third quarter of 2023, according to Crunchbase data. The biggest change in the third quarter compared to the previous yr was the decrease in the amount invested in transactions above USD 500 million.
Last quarter, big funds went to corporations involved in autonomous vehicles, defense technologies, skilled services, semiconductors and artificial intelligence models.
Apartment in early stage y/y
Early-stage funding reached $24.7 billion, down quarter-over-quarter, largely driven by $6 billion in Series B funding Elon MuskOpenAI competitor xAI in the second quarter, which skewed those numbers upwards. (On Wednesday, two days after the fourth quarter, OpenAI officially announced its own $6.6 billion raise, bringing its estimate to greater than $150 billion.)
Early-stage funding has remained consistent yr over yr. By far the large early-stage rounds were dominated by AI and biotech.
Seeds down
Seed funding reached $7 billion in the third quarter, down quarter-over-quarter and year-over-year, according to Crunchbase data. (Although price noting, there is often a gap because many seed funds are often added to the Crunchbase dataset after the quarter close.)
The bulk of the seed funding – roughly $6.8 billion – was invested in funds of $1 million or more in greater than 1,500 corporations around the world.
By Q3
Year-to-date, enterprise capital funding is down roughly 7% year-over-year.
Based on an evaluation of world funding in the third quarter compared to the same period in 2023, year-to-date seed funding appears flat (but likely to show growth as seed rounds are added after the end of the quarter), early stage funding levels increasing by roughly 10 %, and late-stage financing drops by roughly 20%.
While enterprise capital appears to be holding regular from yr to yr, the fundamental dynamics of the industry are changing as fundraising for enterprise funds slows in 2024. With fewer funds available, the impact will likely be seen in the earliest stages of funding.
Methodology
The data in this report comes directly from Crunchbase and is based on reported data. Data is from October 2, 2024.
Please note that data transfer delays are most noticeable in the earliest stages of a enterprise, with seed funding amounts increasing significantly after quarter/yr end.
Please note that every one financing amounts are in US dollars unless otherwise noted. Crunchbase converts foreign exchange to U.S. dollars at the spot rate in effect on the date financing rounds, acquisitions, IPOs and other financial events are reported. Even if these events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historical spot price.
Glossary of financing terms
Effective January 2023, we have modified the way we include corporate financing rounds in our reporting. Corporate rounds are only included if the company has raised seed financing as a part of a series financing round.
Seeds and Angels consist of seed, pre-seed and angel rounds. Crunchbase also includes enterprise rounds of unknown series, equity crowdfunding, and convertible notes with a size of $3 million (in U.S. dollars or a U.S. dollar equivalent) or less.
The early stage consists of Series A and Series B rounds, as well as other sorts of rounds. Crunchbase includes enterprise rounds of unknown series, corporate ventures and other rounds above $3 million and those valued at lower than or equal to $15 million.
The Late Stage consists of Series C, Series D, Series E, and later lettered expedition rounds following the “Series [Letter]“Naming convention. Also included are enterprise rounds of unknown series, corporate ventures and other rounds valued at greater than $15 million.
A technology development is a private equity round led by a company that has previously raised a “venture” round. (Basically any round from the pre-defined stages.)