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Ask any venture capitalist if we are still in a venture capital bear market and this investor will certainly tell you no, because funding is still flowing to good companies.
This may seem like a lie, because stories abound about how difficult it is for those who are raising now. And for good reason. Bearish rounds — i.e. raising at a lower valuation than the previous round, which founders want to avoid unless they have a choice — remain at near-record highs through the first half of 2024, according to Omni Project Lighthouse a report. According to the Omni report, about 39% of late-stage deals were in the red. This covers Series B and beyond, with the largest proportion of down rounds in Series C and beyond.
Even Stripe — whose success no one doubts — hasn’t fully recovered to its 2021 valuation of $95 billion, following a large secondary deal in July. Although it was back to $70 billion by then.
But despite this kind of gloom, the statistics for late 2024 are full of good news as well. For example, New data from Crunchbase It shows a clear surge in mega deals – financing rounds of $100 million or more.
Crunchbase has tracked nearly 240 mega rounds for U.S. startups so far this year, which is already more than the 210 rounds raised throughout last year.
What’s even more interesting is that Crunchbase’s top category for these trades was not AI. Biotech and healthcare startups accounted for a whopping 87 deals, compared to 26 deals in the AI category, which ranked second.
Admittedly, some of these rounds are crossovers: companies working on AI in healthcare. For example, Crunchbase describes AI-powered drug discovery company Xaira Therapeutics as one of the notable megadeals in health tech. Xaira launched in April in a massive $1 billion round led by ARCH Venture Partners and Foresite Labs (both well-known biotechs), but with classic Silicon Valley venture capital firms in the round as well, like NEA, Sequoia Capital, Lightspeed Venture Partners, SV Angel, and others.
We arguably call Xaira an AI company, and we’ve included it in our ongoing list of tracking mega AI startup deals.
But there were also deals like Ultra-Shiny Medicine’s Series A of $120MLed by Eli Lilly. While it also uses machine learning to speed up drug production, it focuses on finding drugs for certain small molecule receptors on cell membranes. This is a hot area in biotech right now, no need to wash with AI. The deal was backed by classic tech investors Insight Partners and Gaingels, as well as NVentures (NVIDIA’s venture capital arm), which seems to be everywhere these days.
Other mega Series A and B deals in the biotech space include the $120 million Series B that closed terai treatments, Which also works on small molecule drugs; and a $100 million Series A Bio judo Landed to treat kidney medications. It seems like a new huge biotech deal is announced every week.
Along with health technology and artificial intelligence, another sector generating mega rounds is cybersecurity, with 16 such deals so far this year. Examples include email security startup Kiteworks, which raised $456 million, data security startup Cyera, which raised $300 million, and cloud security startup Wiz, which raised a whopping $1 billion.
There are also a few other commodity brands for early-stage founders. Omni found that pre-fund valuations improved slightly for seed and Series A deals in the first half of the year.
It also appears that dealmaking in 2024 will be at roughly the same pace as 2023, according to Q3 Project Monitor PitchBook-NVCA. In 2023 I recorded just under 16,000 tradeswhich was slightly above average annual activity before the pandemic and ZIRB-fueled craze of 2020-2021.
For those interested in learning more, TechCrunch Disrupt 2024 will host a session on the Builders platform titled “What You Need to Raise a Series A Today” and another on “How to Raise in 2025 If You Get a Flat, Bottom, or Extension Round.”
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