Despite the overall decrease in funding, there were signs of recovery in the IPO market, with two venture-backed companies, Astera Labs and Reddit, going public and trading up significantly on their first day. Andreessen Horowitz is reportedly raising $7 billion in new funds, and Y Combinator is raising $2 billion across three funds, indicating that venture capital remains an attractive asset class for leading investors. However, the challenging funding environment is expected to continue due to the liquidity shortfall from 2022.
Key takeaways:
- The first quarter of 2024 saw the second-lowest global startup funding since 2018, with global venture funding reaching $66 billion, a 6% increase quarter over quarter but a 20% decrease year over year.
- AI and healthcare were the leading sectors for investment, with AI companies raising $11.4 billion and healthcare and biotech companies raising $15.7 billion.
- Seed companies raised just over $7 billion, down by more than $1 billion year over year, while early-stage funding increased, totaling around $29.5 billion, up 6% year over year.
- Late-stage companies raised $29.5 billion, down 36% year over year, marking the biggest pullback by stage in Q1 2024.