Ask any VC if we are still in a venture capital bear market and the investor will almost certainly say no. The money is still flowing for good companies.
That might sound like spin, as there are plenty of anecdotes about how difficult it still is for those who are parenting now. And there’s a reason for that. Down rounds, or raising money at a lower valuation than the previous round, which founders want to avoid unless they have no choice, are still at near all-time highs through the first half of 2024, according to a report from Aumni’s Venture Beacon. According to Aumni’s report, approximately 39% of final-stage deals were down rounds. This includes Series B and above, with the highest percentage of down rounds in Series C and above.
Even Stripe, whose success no one doubted, has failed to fully rebound to its $95 billion valuation in 2021, based on a massive secondary transaction that occurred in July. Although by then it had risen again to $70 billion.
But despite this grim situation, the statistics for the end of 2024 are also full of good news. For example, new data from Crunchbase shows that large deals raising more than $100 million are in full swing.
Crunchbase has tracked nearly 240 mega rounds for U.S.-based startups so far this year, already more than the 210 raised last year.
What’s even more interesting is that the top category of these transactions on Crunchbase is not AI. Biotech and healthcare startups accounted for 87 mega deals, compared to 26 for the second-place category, AI.
Some of these rounds are acknowledged to have crossovers with companies researching AI for healthcare. For example, Crunchbase listed AI drug discovery company Xaira Therapeutics as one of its noteworthy medtech megadeals. Xaira launched in April with a massive $1 billion round led by ARCH Venture Partners and Foresite Labs (both known as biotechs), but also backed by NEA, Sequoia Capital, Lightspeed Venture Partners, SV Angel and others.
We unmistakably call Xaira an AI company and have included it in our ongoing list tracking AI startup large deals.
But there have also been deals like the $120 million Series A from Eli Lilly-led Superluminal Medicine. Machine learning is also being used to speed up drug creation, but the focus is on finding drugs for specific small molecule receptors on cell membranes. This is currently the hottest field in biotechnology. No AI cleaning required. The deal was backed by classic tech investors Insight Partners and Gainels, as well as Nventures, the venture capital arm of NVIDIA that seems to be everywhere these days.
Other biotech Series A and B megadeals include the $120 million Series B closed by Terray Therapeutics. The company is also researching small molecule drugs. And the $100 million Series A Judo Bio has landed to tackle kidney drugs. It seems like a new biotech mega deal is announced every week.
Besides healthcare technology and AI, another sector undergoing mega rounds is cybersecurity, with 16 deals so far this year. For example, email security startup Kiteworks raised $456 million, data security startup Cyera raised $300 million, and cloud security startup Wiz raised a whopping $1 billion.
There are also several other product indications for early-stage entrepreneurs. Aumni said pre-funding valuations for seed and Series A deals improved slightly in the first half of the year.
According to the Q3 PitchBook-NVCA Venture Monitor, the pace of deal closing in 2024 appears to be progressing at roughly the same pace as in 2023. In 2023, it recorded just under 16,000 transactions, slightly higher than average annual activity before the pandemic and ZIRP-induced frenzy in 2020-21.
For those interested in learning more, TechCrunch Disrupt 2024 will feature a Builder Stage session titled “What You Need to Raise Your Series A Today” and “How to Raise in 2025 If You’re Flat, Down, or Down.” We will be hosting a session. Extended round.”
