Investment Analysis of 2024 Venture Capital Market
The 2024 Venture Capital Report, a comprehensive examination of the US venture capital market, offers valuable insights into the current state and future of the industry. The report provides an analysis of various sectors, including large financing rounds, noncompetes, option repricings, defense tech funding, and deal terms.
Large Financing Rounds
Despite a global funding downturn, notable outsized deals are driving VC trends. For instance, a major legaltech company in British Columbia raised a $1.24 billion round in 2024, one of the largest deals that year. Furthermore, funding for applied AI continues to see substantial large-scale investments, with outlier deals such as a $2 billion seed round for Thinking Machines Lab in 2025.
Noncompetes Landscape
While the specific 2024 report data on noncompetes is not explicitly referenced, recent venture capital trend analyses highlight increased regulatory scrutiny and evolving startup policies around noncompete agreements. These trends can impact talent mobility, compensation structures, and startup hiring practices.
Private Company Option Repricings
Given market volatility and down rounds in segments like Emerging Venture Markets, where funding dropped 40%, it's likely that startup option repricings have increased to maintain employee incentives in lower valuation environments.
Defense Tech Startups Funding
Defense tech startups have gained increased attention due to government tailwinds. Climate tech and defense tech sectors are experiencing new funding heights fueled by public sector support, although geopolitical and regulatory risks remain.
Venture Capital Financing Deal Terms
VC deal terms in 2024 continued to reflect a cautious but evolving landscape. The share of early-stage deals increased significantly, indicating a focus on early-stage scaling. Globally, terms also accommodated the rise in AI and software investments, with corporates and corporate VCs participating in about 36% of deal value.
Regional Breakdowns
The report includes regional breakdowns of the US venture capital market, offering insights into the funding trends across different regions. Southeast Asia and Africa were hardest hit by funding declines, while the Middle East showed investor growth despite downturns.
Additional Context
- The total venture funding in Emerging Venture Markets declined by 40% YoY in 2024, while the total number of investors slightly increased, signaling cautious optimism.
- Private equity and venture capital exit activities remain strong through M&A, with $5.2B realized exits in VC via 40 deals primarily by acquisitions.
- Generative AI and software sectors dominate VC funding share, accounting for approximately 45% of global VC funding in early 2025.
The 2024 VC trends reflect consolidation amid volatility, with standout large deals in AI and legaltech, emerging government-supported sectors like defense tech, ongoing evolution in deal terms favoring early-stage investments, likely increased option repricings due to valuation corrections, and growing regulatory influences around noncompetes and founder protections. These dynamics set the stage for cautious yet forward-looking venture activity into 2025.
The report also offers financing considerations for defense tech startups, insights into the current state of the US venture capital market, and a summary of trends in venture capital financing deal terms in M&A transactions involving venture-backed companies. However, it does not provide a new forecast for the future of the US venture capital market or a new comprehensive examination of the US venture capital market.
Investing in technology sectors, particularly applied AI, continues to see substantial finance from venture capital, with large-scale investments exceeding billions of dollars, as seen in the case of Thinking Machines Lab's $2 billion seed round in 2025.
Given the market volatility and down rounds in certain segments, it is anticipated that private company option repricings have increased, aiming to maintain employee incentives in lower valuation environments.
