TLDR:
- Global venture capital deals are struggling due to economic uncertainties.
- Fundraising figures globally are slow, with the lowest total commitments since 2015.
A new report from PitchBook-NVCA Venture Monitor shows a challenging landscape for global venture capital dealmaking. Despite a slight uptick in global deal value in the second quarter of 2024, overall deal activity remains sluggish. Many VC-backed companies globally are struggling due to lower available capital, causing some to return to the market to raise further private funds because exits cannot be achieved. Fundraising figures globally are particularly slow, on track to see the lowest total commitments since 2015. The report attributes the slowdown to a high rate of recommitments to previous strategies by global limited partnerships, impacting the ability of LPs to re-up commitments to unbalanced portfolios.
The report also highlights a lack of midsized and large mergers and acquisitions in the global venture market, with small deals dominating the landscape. While deal activity in the U.S. increased on a count basis in the second quarter, a slowdown in exits is pressuring companies back into a less forgiving market. The IPO market has also faltered, with limited new funding and large venture capital firms dominating fundraising efforts. Despite the challenges, the report remains cautiously optimistic, stating that VC returns could see an increase if large tech companies begin to list publicly at a higher pace. However, the outlook for new funding remains muted, with VC funds raising only a limited amount in the first half of the year.
In conclusion, the global venture capital market is facing significant challenges due to economic uncertainties, slow fundraising figures, a lack of exits, and a reliance on larger firms for funding. While there are some positive signs, the overall landscape remains challenging for VC-backed companies worldwide.
