If you ask a VC if we're still in a venture capital bear market, their investors will almost certainly say, “No, the money is still flowing to good companies.”
That may sound like spin. Because there are plenty of anecdotes about how tough it is for people currently raising children. There's a good reason for that. According to a report from Oumni's Venture Beacon, down rounds, or raising at a lower valuation than the previous round, which founders want to avoid unless absolutely necessary, will remain near all-time highs through the first half of 2024. Ta. About 39% of late-stage deals were down rounds, according to Oumni's report. This covers Series B and above, with the highest percentage of down rounds being Series C and above.
Even Stripe, whose success is unquestioned, has not fully recovered to its 2021 valuation of $95 billion at the time of a massive secondary transaction in July. Although it was back to $70 billion by then.
But despite this bleak picture, there is also a lot of good news in the statistics for the second half of 2024. For example, new data from Crunchbase shows that megadeals, or funding rounds of $100 million or more, are truly booming.
Crunchbase has tracked about 240 mega-rounds for U.S.-based startups so far this year, which is already more than the 210 they raised all of last year.
What's even more interesting is that the top category for these trades on Crunchbase was not AI. Biotech and healthcare startups accounted for 87 megadeals, while the second-place category, AI, had 26.
There is clearly some crossover among these rounds of companies working on AI for healthcare. For example, Crunchbase lists AI drug discovery company Xaira Therapeutics as one of the biggest health tech deals to watch. Xaira launched in April with a large $1 billion round led by ARCH Venture Partners and Foresite Labs (both known for biotech), which also included NEA, Sequoia Capital, Lightspeed Venture Partners, SV Angel, etc.
We probably call Xaira an AI company and include it in our ongoing list tracking AI startup megadeals.
But there were also deals like Eli Lilly-led Superluminal Medicine's $120 million Series A. We are also using machine learning to speed drug development, with a focus on finding drugs for specific small molecule receptors on cell membranes. This is an area that is currently gaining traction in biotechnology and does not require AI cleaning. The deal was backed by classic technology investors Insight Partners and Gaingels, as well as the ubiquitous these days NVentures (NVIDIA's venture capital arm).
Other big biotech Series A and B deals include a $120 million Series B closed by Terray Therapeutics, which is also working on small molecule drugs. And $100 million Series A Judo Bio landed to work on kidney drugs. It seems like a new biotech mega-deal is announced every week.
Beyond health tech and AI, another sector that's garnering mega rounds is cybersecurity, with 16 such deals so far this year. Examples include email security startup Kiteworks, which raised $456 million, data security startup Cyera, which raised $300 million, and cloud security startup Wiz, which raised a whopping $1 billion. We are procuring.
There are a few other things to keep in mind for early-stage founders. Pre-money valuations for seed and Series A deals improved slightly in the first half of this year, according to Oumni.
According to the third-quarter PitchBook-NVCA Venture Monitor, deal closings in 2024 appear to be progressing at about the same pace as in 2023. The number of transactions in 2023 reached just under 16,000, which was slightly higher than the average annual activity before the pandemic and the ZIRP frenzy of 2020-2021.
For those interested in learning more, TechCrunch Disrupt 2024 will feature sessions on the Builders Stage titled “What it takes to raise a Series A today” and “Raising in 2025 if flat, down, or down. A session entitled “How to” will be held. extended round. ”