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Global VC fundraising showed signs of improvement in the third quarter, but the amount raised from January to September was the lowest for nine months in the last five years.
For the first three quarters of this year, business revenues rose to just under $890 billion, up from $95 billion in the same period last year and an all-time high of $150 billion in the first nine months of 2022, according to the report. exclusive research by Venture Capital Journal.
The year started on a bad note, with $16 billion raised in Q1, the lowest quarterly figure since Q3 of 2017. It appeared that things were returning to normal by the end of June, with $51 billion raised in the first half of the year. At that time, VCJ he noted that if the level of Q2 continues for the rest of the year, the whole year could be similar to 2023. Now, assuming that Q4 is the same as Q3, the total for the end of the year could come to about $115 billion, which is the same. raised in 2020, which was the lowest annual rate in the past five years.
That’s not to say the Q3 numbers shouldn’t give fundraisers a glimmer of hope. The $32 billion total was the second-biggest quarterly figure in the past five quarters — and more than double what VCs raised in Q1.
Warning signs
What should give fundraisers pause is the decline in the number of business vehicles being raised, a number made up of closed funds, separate accounts and side funds. After hitting a record of 1,724 in 2021, the number of VC vehicles raised annually has dipped to less than 1,300 in 2022 and nearly 1,000 in 2023.
So far this year, the manger has closed on 636 commercial vehicles. To match last year’s numbers, they would need to close on 57 percent more cars in the fourth quarter than they did in Q3.
One number that should give fundraisers pause: 18. That’s the average number of months that firms spent advertising their money before making the final close this year. (Note that the data is only for the funds that report it.) The amount of time VCs spend on the road has risen significantly since 2021, when the average was eight months. It grew to 11 months in 2022 and 15 months last year.
The average is great
Driven by large and small funds closing this year, the average fund size hit a record high of $168.00 in the first nine months of this year. That’s up from $139 million for the full year 2023 and $155 million for the full year 2022. More (eight) billion-dollar-plus funds were closed in Q3 than in the first quarter (one) or the second (four).
Europe gains on Asia
As was the case in H1, North America remained the top focus area and Europe continued to overtake Asia as the second most popular focus area (excluding regional capital). Revenues focused on North America raised 49 percent of the total in the first nine months of the year, followed by multi-regional (23 percent), Asia-Pacific (15 percent), Europe (13 percent), and Middle East / North Africa. (1 percent). The only two regions showing improvement from last year are Europe, which improved by three percent from 2023, and Asia-Pacific, which increased by one percent.
In a market of $240bn
Funds still in the market are looking for a combined $240 billion, which is the same amount they were looking at at the end of Q2. Investments in North America topped the list (seeking a combined $120 billion), followed by Asia-Pacific ($530 billion), multi-regional ($34 billion), Europe ($25 billion), MENA ($3.8 billion), Latin America ($2.5 billion) and Sub-Saharan Africa ($1.2 billion).
ARCH shares the top spot
Perhaps the biggest change from the second quarter to the third was the number of revenues of a billion dollars or more in our top 10. There were only four at the end of H1. Now 13 currencies have that distinction. Joining Norwest as the largest fundraiser year-to-date is ARCH Venture Partners, each of which closed at $300 million. Running second and third are Flagship Pioneering and HongShan (formerly known as Sequoia Capital China), which raised $2.6 billion and $2.5 billion, respectively.
Check out our fundraising performance report on the full breakdown of fundraising activity in Q3 2024. You can download the report as a PDF here or download the data here.
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