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Bengaluru: Global venture capital (VC) investment fell from a five-quarter high of $95.5 billion in the second quarter (Q2) of 2024 to a nearly seven-year low of $70.1 billion in Q3 2024, according to a report by KPMG released on Tuesday.
The number of VC deals dropped from 9,270 to 7,227 over this period.
However, India still showed significant raises despite a decline in Q3 2024 as VC investment in India remained at $3.6 billion, helped by a number of raises by consumer-focused businesses. In fact, in India, there is strong optimism that the VC market is recovering.
On the global downturn, the report points to reasons such as ongoing geopolitical conflicts, the continued exit drought, anticipated seasonal lulls in investment in several key jurisdictions, and the uncertainty driven by the upcoming US presidential election.
Global corporate VC investment fell from $54 billion to $35.2 billion between Q2 2024 and Q3 2024. Global fundraising activity was well off the pace needed to match even 2023’s subdued total of $202.8 billion. At the end of Q3 2024, global fundraising stood at $143.1 billion. Globally, including rest of Asia, business-to-business (B2B) companies attracted the greatest levels of VC investment.
In sharp contrast, India saw large raises by business-to-consumer (B2C) businesses.
While fintech continues to attract a lot of attention in India, VC investors in the space have become more cautious in recent quarters as traditional banks have increasingly introduced their own fintech products aimed at the large unbanked and underbanked segments of the population.
Globally, the AI sector continues to thrive, accounting for six of the ten largest deals. While core AI firms continued to attract VC investments during Q3 2024, VC investors also showed very strong interest in AI-driven industry solutions. AI-powered defense-tech companies raised large rounds in Q3 2024.