There’s faltering, falling and failing. While the venture industry’s showing in the first half of 2024 hasn’t sunk to failing, general partners and the startups they back have fallen a long way from the asset class’s high point in 2021.
If the cheap money era stood for eye-popping IPOs and dry powder galore, the first two quarters of 2024 cemented troubling trends: A shortage of public offerings, definitive down rounds and fund launches drying up faster than a lake in Phoenix.
Investor-friendly exits have become the exception, not the rule. Case in point: Less than $36 billion in exit value showed up in limited partner pocketbooks globally in Q2, the lowest quarterly reading since 2016, according to PitchBook data.
The IPO drought explains why VCs are coming up against a fundraising wall. The industry has collected $80.5 billion in capital commitments from LPs globally this year, on pace for a nine-year low dating back to 2015.
2024 is on track for fewer than 1,300 new vehicles of all sizes and sector stripes—versus nearly 4,000 in 2021. Still, the biggest players have continued to lock down fresh capital.
In turn, VC dealmaking has settled into a cautious cadence that resembles the pre-pandemic era. Though dealmaking dynamics have improved somewhat for founders, elevated interest rates and diminishing dry powder overshadowed wheeling and dealing.
Notwithstanding the occasional mega-deal—like when biotech AI specialist standout Xaira Therapeutics launched with $1 billion in April—the venture outlook has rarely been grimmer.
Perhaps the problem is too many startups.
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