While Series A and B funding for U.S.-based corporations increased in the first half of 2024—up 34% yr over yr—that growth might be misleading.
While total funding reached $31.5 billion — the highest amount invested at this stage in two years — the growth was concentrated in larger funds and two leading sectors — healthcare/biotech and artificial intelligence.
This includes $6 billion in Series B funding xAIwhich is a good portion of the increase. Still, if we remove this funding, H1 2024 will still be above the half-year funding amounts in 2023.
Bottleneck in the A series
As of H2 2022, we found a bottleneck in Series A based on our evaluation of Crunchbase data. As the market tightened, seed-stage corporations faced a tougher environment in which to lift a Series A round. While all corporations are facing this crisis, the seed stage accounts for the largest absolute number of corporations funded, in addition to the stage with the least funding and lower revenue to administer in a tightened funding environment.
The recent increase in Series A and Series B funding does not solve this problem.
Big rounds boost early stage
The growth in Series A and Series B funding in H1 2024 focused on larger funding at these stages. We looked at funding by half-year each below and above the $50 million level since 2018.
Large Series A rounds gained momentum in 2021—the peak of the market. These large rounds have slowed every six months since then, but have picked up in 2024.
Nearly two-thirds of these large Series A corporations in the first half of 2024 were in the healthcare/biotech space. The second industry in terms of large Series A rounds is AI. Other sectors with large funds in the low and mid-single digits include Web3, energy, and hardware.
Series B rounds have been on a similar trajectory. Larger rounds of $50 million and more surged around the peak of the market and slowed down from the second half of 2022. They have recently began to select up steam.
Alongside the xAI mega-round, healthcare/biotech is leading the podium this yr, followed by AI. Hardware, including semiconductors and robotics, is the third-largest sector for large Series B rounds.
Concentrated plants
The growth in Series A and B funding in the first half of the yr was primarily driven by larger funds and two leading sectors: healthcare/biotech and artificial intelligence.
Other sectors have been neglected.
There is a big gap between these two leading sectors and others. For example, the amounts in the financial services, e-commerce and shopping, and transportation sectors have fallen significantly.
Despite the proven fact that financing was concentrated, there was a noticeable increase in the number of large Series A rounds. This might be considered a sign of optimism.