Amid the funding decline, investors are favoring smaller mid- and late-stage deals. However, they are still willing to place early-stage bets where they see strong opportunities.

Based on our deep dive in the full report, here is the TL;DR on the state of climate tech:

• • Global climate tech funding declines by 20% QoQ to $4.9B in Q2’24 — the lowest quarterly total since Q2’20. While deal count rebounded QoQ to 397 in Q2, it still came in well below 2023’s quarterly totals.

• • Climate tech doesn’t see any unicorn births (private companies reaching $1B+ valuations) in Q2’24, marking climate tech’s second straight quarter without any new unicorns. This coincides with a decline in late-stage deal sizes — the median deal size at that stage is $38M in 2024 YTD, down 16% vs. full-year 2023.

• • Late-stage deal sizes decline, while early-stage sizes show strength. The median late-stage deal size is $38M in 2024 YTD — down 16% from full-year 2023. In contrast, median early-stage size is up 39% YTD, suggesting that investors are still willing to place bets where they see strong early-stage opportunities. Two of the largest early-stage deals in Q2’24 went to Cylib and Aether Fuels. Both companies intend to use the funding to scale and support commercialization initiatives — goals that are generally communicated by later-stage companies.

• • $100M+ mega-rounds continue to trend down in Q2’24. Climate tech mega-rounds dropped from 17 in Q1’24 to 9 in Q2’24. The majority of Q2’24’s mega-round recipients are focused on scaling operations and achieving full-scale commercialization. For example, one of the quarter’s largest deals ($375M Series G) went to battery materials developer Sila, which plans to use the funding to ramp up silicon anode production.

Source: CB Insights — Sila Funding Insights

• Climate tech funding drops yet again in Asia. Climate tech startups in the region raised a total of $0.4B in Q2’24, down 33% QoQ and 89% YoY. China suffered the sharpest funding decline (-90% QoQ) among highlighted countries in the region. India and Japan watched funding fall by 28% and 57% QoQ, respectively.

More energy resources from CB insights

• 5 climate tech markets gaining momentum in 2024
• The grid tech market map: The companies tackling the growing need for reliable electricity
• The energy impact of generative AI: 3 technologies transforming the future of data centers
• Analyzing 15 oil & gas leaders’ tech priorities: Here’s where incumbents are buying, investing, and partnering
• Sodium-ion batteries are poised for a breakout moment — energy players should prepare
• Why energy giants should have green ammonia on their radar

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We provide a deep dive on the state of insurtech in the full report. Here’s the TL;DR:

• Global insurtech funding increases to $1.3B in Q2’24 — the highest level since Q1’23. Insurtech funding grew 44% QoQ — led by 50% growth in funding to P&C insurtechs, from $0.6B to $0.9B. Funding to life & health (L&H) insurtechs also increased QoQ, ticking up from $0.3B to $0.4B.

• Insurtech deal count falls 27% QoQ to 82, the lowest level since 2016. The drop was nearly proportional across P&C and L&H: P&C deals fell 28% to 54 deals, while L&H deals decreased by 26% to 28 deals. On a percentage basis, the decline in insurtech deals outpaced the broader venture and fintech environments (where deal activity fell 7% and 16% QoQ, respectively).

• Median insurtech deal size increases 25% from $4M in 2023 to $5M in 2024 YTD. Only 2021 has seen a higher median deal size over the past 10 years. However, while the median early-stage insurtech deal size is at a record-high $4M this year, late-stage deal size ($31M) is the lowest it’s been since 2018. Insurtech mega-rounds (deals worth $100M+) were nearly nonexistent in Q2, with Sidecar Health, a health insurer, raising the quarter’s only such deal (a $165M Series D).

• Insurtech sees its first IPOs since Q3’22. Two insurtechs IPO’d in Q2’24 — Digit Insurance, an India-based insurance provider, and Saudi Arabia-based Rasan, which primarily focuses on auto insurance sales and vehicle services. Both IPOs occurred amid a broader lull in global IPO activity.

• Europe’s share of insurtech deals reaches 35% — a record high. Deals to Europe-based insurtechs stayed roughly steady, ticking up from 28 in Q1’24 to 29 in Q2’24. Comparatively, the US saw insurtech deal count fall from 61 to 40. Funding to Europe-based insurtechs reached a 7-quarter high ($0.5B), driven by two $93M deals for Finland-based ICEYE — a provider of data from satellite imagery — and UK-based Vitesse, a claims payments processor.

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Massive rounds to AI companies were a key driver of the funding growth, with 3 of the 5 largest CVC-backed deals this quarter going to AI infrastructure players Scale ($1B), Mistral AI ($502M), and Cohere ($450M).

Based on our 124-page report, here is the TL;DR on the state of CVC:

• ​​Global CVC-backed funding climbs to $15.6B in Q2’24. Over half ($8.4B) of this funding came from $100M+ mega-rounds. Meanwhile, global deal volume declined by 12% QoQ to 782. This drop was particularly pronounced in Asia, which saw a 24% drop in deals QoQ.
• This year, the average CVC-backed deal size is $26.6M, up 27% from $20.9M in full-year 2023. The increase is due in part to billion-dollar deals to startups like Scale ($1B Series F, backed by the CVC arms of Intel, AMD, Cisco, and ServiceNow) and Wiz ($1B Series E, backed by Salesforce Ventures).
• CVC-backed funding to digital health startups falls 57% QoQ to 0.6B, its lowest point since Q4’17. Retail tech and fintech saw similar decreases, with funding down 52% and 8% QoQ, respectively. Companies not explicitly focused on AI face challenges raising funds in the weakened venture market.

• Quarterly CVC-backed funding in China slips to $0.2B, a 60% QoQ decrease. Deal volume also fell 24% QoQ to 59, its lowest level since 2015. China’s tech market has faced significant challenges, including rising macroeconomic concerns, escalating geopolitical tensions, and a strict regulatory environment.

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Meanwhile, overall AI deal volume broke its extended freefall in Q2’24, rising by 16% QoQ to reach 948. This bucked the trend in venture deals more broadly (-7% QoQ).

Based on our deep dive in the full report, here is the TL;DR on the state of AI:

• Global AI funding increases 59% QoQ to $23.2B in Q2’24 — the highest quarterly level on record, exceeding even the level seen during 2021’s venture boom. The jump was driven by a handful of $1B+ rounds and outpaced the growth in broader venture funding (+8%). Meanwhile, AI deal count climbed by 16% QoQ to reach 948, bucking the trend in venture deals more broadly (-7% QoQ).

• Average AI deal size is $28.9M in 2024 so far — up 55% vs. $18.6M in full-year 2023. A relatively small number of players have had an outsized impact on this upward trend, raising massive $1B+ deals in Q2’24: 
  • xAI — $6B Series B at a $24B valuation
  • G42 — $1.5B investment from Microsoft 
  • CoreWeave — $1.1B Series C at a $19B valuation
  • Wayve — $1.05B Series C from Softbank, Microsoft, and Nvidia
  • Scale — $1B Series F at a $13.8B valuation

Meanwhile, the median AI deal size is up 25% in 2024 so far.

• AI unicorn births remain steady at 6 QoQ in Q2’24. Generative AI was a key theme for new unicorns (private companies reaching $1B+ valuations). Some of these companies, like xAI, are focused on generative AI infrastructure. Others are primarily working on generative AI applications, like Perplexity (search) and Cognition (coding).

Among new AI unicorns in Q2’24, xAI landed the most sizable valuation. The company was valued at $24B after raising $6B in Series B funding, which it plans to use to bring its first products to market.

• AI companies raise 32 mega-rounds (deals worth $100M+) in Q2’24, marking a 28% increase QoQ. Meanwhile, funding from AI mega-round deals climbed 74% QoQ in Q2’24. This was largely driven by US mega-round deals, which collectively amounted to $10.8B — 67% of AI mega-round funding in Q2.
• Among major global regions, the US continues to lead in AI funding and deals. AI startups based in the US drew $15.2B across 476 deals in Q2’24. This equates to 66% of the global AI funding total and 50% of the global deal total in Q2.

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Amid the decline, investors have shifted their focus to writing fewer, larger checks for more mature companies in the digital health ecosystem. Meanwhile, their interest in early-stage companies has cooled.

Based on our deep dive in the full report, here is the TL;DR on the state of digital health:

• Global digital health funding declines by 26% QoQ, with funding falling to $2.9B across 235 deals in Q2’24 — the lowest quarterly deal volume seen since 2014. However, the annual average deal size globally is $16.7M in 2024 YTD, up 40% from the average for full-year 2023, signaling that investors are writing fewer but larger checks.

• US deal share grows to 61%, up from 54% in Q1’24. While digital health funding in the US declined by 18% QoQ in Q2’24, the US’ proportion of the global deal volume grew, marked by an increase in mid- to late-stage deal share. Median deal size is also up in the US in 2024 so far — sitting at $7.5M vs. $4.6M in full-year 2023.

• Mid-stage deal share jumps to 26% in 2024 YTD, while early-stage deal share falls by 14 percentage points. Early-stage deals have consistently accounted for 60%+ of all digital health deals in recent years. However, in 2024 YTD, early-stage deal share has dropped to 51% as mid- and late-stage deals have captured more investor interest. In the US, early-stage deal share has fallen to 45% in 2024 YTD vs. 62% in full-year 2023.

• $100M+ mega-rounds drop off in Q2’24 but are more varied across the digital health landscape. Digital health mega-rounds dropped from 8 in Q1’24 to 5 in Q2’24. While mega-rounds were focused on biotech in Q1’24, they were more spread out in Q2’24, spanning areas like care navigation, ultrasound tech, and value-based care tools. The largest deal of the quarter ($200M Series D) went to Foodsmart — a telenutrition company focused on chronic disease management.

Source: CB Insights — Foodsmart Funding Insights

• Digital health exits increase in Q2’24, rising from 26 to 32 QoQ. AI-driven platforms were the highlight here, with Tempus (precision medicine) and XtalPi (drug R&D) going public via IPO and Nuvo Group (remote pregnancy monitoring) going public via SPAC. Digital health M&A exit activity also picked up in Q2’24, especially in Europe, which saw M&A deals jump from 5 to 10 QoQ. Globally, virtual care, provider workflow tools, and drug R&D platforms were key categories for M&A in Q2’24.

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However, two huge deals — for market intelligence firm AlphaSense and payments juggernaut Stripe — obscured the reality that it was another tepid quarter for the sector as a whole.

Based on our deep dive in the full report, here is the TL;DR on the state of fintech:

• Funding increases by 19% quarter-over-quarter (QoQ), buoyed by 2 blockbuster deals. Quarterly funding rose in Q2’24 to $8.9B. But if it weren’t for 2 late-stage deals for Stripe ($694M) and AlphaSense ($650M), funding would have remained flat QoQ. A 16% decline in deal volume also indicates fintech investors remain cautious.​
• Average deal size decreases to $12.8M, down 4% vs. 2023. The slight decline in average deal size YTD highlights broad stagnation in fintech deal sizes. Yet, when looking at the median, deal size has ticked up from $3.1M in 2023 to $4M this year. The 29% increase could signal strength in the long tail of smaller fintech deals.
• Mid- and late-stage deal share is at 20% YTD, up from 18% in 2023. In a more favorable operating environment, investors are showing greater confidence in later-stage companies than they did in the past 2 years — especially in areas like payments and lending. In payments, mid- and late-stage rounds make up 27% of deals YTD, vs. 21% in 2023. In digital lending, mid- and late-stage deals make up 35% of deals YTD, compared to 20% in 2023. 
• 30% of the biggest early-stage deals are for digital asset companies. Crypto and blockchain-focused fintechs are receiving renewed focus, as the crypto winter thaws. Digital asset companies accounted for nearly one-third of the top 10 seed/angel and top 10 Series A rounds. The two largest early-stage deals in the crypto space went to digital asset infrastructure platforms TradeDog ($75M seed) and Biton ($44M Series A).
• US-based funding increases by 45% QoQ to $4.8B. In addition to the funding increase, the US led the world across a few metrics in Q2’24, including share of equity deals (40%) and exits (36%). Mega-rounds led the way: Nine of the 10 biggest deals in the US were worth $100M or more, the most since Q2’22. LatAm was the only other major global region with a funding increase, up by 22% to $442M.

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Based on our deep dive below, here is the TL;DR on the state of venture:

1. Venture funding climbs for a second straight quarter, reaching $65.7B, up 8% quarter-over-quarter (QoQ). However, while funding gained momentum, deals slid for the ninth quarter in a row to 6,230. Global deal volume is now less than half of what it was at its peak in Q1’22.
2. At $14.4M, the average deal size is up 17% this year so far vs. 2023. Even in a more cautious investing environment, the deals that do happen have ballooned in size as investors put more behind select startups. 
3. AI startups are dominating global funding, capturing 35% in Q2’24. This is the highest quarterly share on record. AI startups drew $23.2B in Q2’24 — up 59% QoQ — driven by mammoth $1B+ deals to Elon Musk’s xAI as well as Scale, CoreWeave, and others. 
4. The US is attracting a greater portion of exit activity, with exit share rising 4 percentage points QoQ to 39%. This represents its highest share in 2 years. Top US-based exits in Q2’24 included IPOs from Tempus and Rubrik — both valued at over $5B — as well as Hyundai’s acquisition of Motional priced at $4.1B.
5. SOSV is the most active venture investor, backing 35 companies in Q2’24. It’s followed by Andreessen Horowitz (33 companies), General Catalyst (31 companies), and Lightspeed Venture Partners (28).
6. Fintech funding rebounds 19% QoQ to hit $8.9B — a 5-quarter high — led by $600M+ rounds to Stripe and AlphaSense. But it was a different story for the retail tech and digital health sectors: retail tech funding was stagnant from Q1 to Q2, while digital health funding slipped by 26%.
7. Quarterly funding to startups in Asia falls below $10B for the first time since 2014. The drop was especially severe in China, where some international investors have pulled back or retreated altogether amid rising geopolitical tensions. Meanwhile, the US and Europe — the two largest regions for venture investment — each saw funding grow by double-digit percentages in Q2’24.

Venture funding ticked up for a second consecutive quarter, reaching $65.7B in Q2’24. Nearly half of this funding (47%) came from mega-rounds (deals worth $100M+). xAI’s $6B round alone represented nearly one-tenth of the global total and helped prevent funding from declining QoQ.

Despite the strong showing, deal volume slipped for a ninth straight quarter — sinking 7% to 6,230 — as investors remain cautious in the less exuberant market. The US, Europe, and Asia all saw deal count decrease QoQ, while it grew slightly across Canada, LatAm, Africa, and Oceania.

With deals down and funding up, the average deal size has climbed this year, pacing at $14.4M — up 17% compared to full-year 2023. Notably, it’s not just a few massive deals that are pulling that figure up: the median deal size has also grown from $2.5M to $3M over the same period. 

Among investment stages, the median deal size has increased across early- and mid-stage rounds, while it has fallen slightly at the late stage.

One factor more than any other is driving gains in the venture market right now, and that’s AI. Startups developing AI solutions raised $23.2B in Q2’24 — accounting for 35% of the global total, the highest share ever recorded. This share has been trending up for several years now, especially since the arrival of OpenAI’s ChatGPT in late 2022.

Leading the pack among AI startups, Elon Musk’s xAI outfit raised a whopping $6B round in Q2’24. The 1-year-old company, now valued at $24B, had no trouble finding investors, who believe xAI will gain a competitive edge through integration with Musk’s network of companies (and their data). For instance, Tesla could use xAI’s latest multimodal AI model, which includes vision capabilities, to bring more advanced perception to its Optimus humanoid.

The Funding Insights from xAI’s CB Insights profile point to synergies between xAI and Musk’s other companies, like Tesla.

Other top AI rounds in Q2’24 went to:

• G42 — $1.5B investment from Microsoft
• CoreWeave — $1.1B Series C at a $19B valuation
• Wayve — $1.05B Series C from SoftBank, Nvidia, and Microsoft
• Scale — $1B Series F led by Accel, with backing from corporates including AMD, Amazon, Intel, and Nvidia

Customers can explore thousands of AI startups across industries and technologies in the CB Insights AI Expert Collection.

In Q2’24, the US saw 39% of all exits, which included both IPOs and M&A transactions. The figure represents an increase of 4 percentage points QoQ and puts the US in the No. 1 spot globally, tied with Europe.

Notably, US IPOs are gaining some strength, with Q2 seeing blockbuster debuts from Tempus (valued at $6.1B) and Rubrik ($5.6B). We predicted both companies would go public in our Tech IPO Pipeline report, published in late 2023. 

Go deeper with CB Insights buyer interviews for Tempus and Rubrik to see what their customers are saying.

Meanwhile, the US venture market’s top M&A deal went to Motional, an autonomous driving startup founded as a joint venture between Hyundai and Aptiv. Hyundai took a majority stake in the company at a $4.1B valuation. Per the Funding Insights on Motional’s CB Insights profile, Hyundai and Motional are co-developing a robotaxi service with a target release of 2024.

The Acquisition Insights from Hyundai’s CB Insights profile break down the structure and goals of the Motional deal.

Around the world, the most active venture investor right now is SOSV. The firm, which primarily backs early-stage startups, invested in 35 unique companies in Q2’24, placing it ahead of a16z (33 companies), General Catalyst (31), and Lightspeed (28). 

Customers can use this CB Insights platform search to see SOSV’s top portfolio companies ranked by Mosaic score — which measures a private company’s health — alongside data cuts like commercial maturity, headcount growth, and more.

Among industry sectors, fintech saw funding grow the most, watching it rise 19% QoQ to reach $8.9B. This marks a rebound for the sector vs. Q1’24. Top fintech deals in the quarter went to payments leader Stripe and market intelligence firm AlphaSense. 

The retail tech and digital health sectors were worse off than fintech. Retail tech funding was roughly stagnant QoQ, while digital health funding plummeted to below $3B — its second-lowest quarterly level since 2016.

Among major global regions, the US and Europe outpaced the market as a whole for funding growth in Q2’24. 

Asia, on the other hand, saw its funding fall 13% QoQ to $9.7B. The decline was most pronounced in China, where dollars tumbled more than 50% to $2.2B, whereas India, Singapore, and Japan all experienced funding growth QoQ. 

The top two equity deals in the region went to United Arab Emirates’ G42 and India-based Zepto.

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Driving this growth were mega-rounds (deals worth $100M+), which accounted for 47% of the funding — their highest share since Q1’22.

CVC deal count remained steady QoQ, again showcasing CVCs’ resilience compared to the broader venture market, which saw quarterly deals plummet to their lowest level in years.

Based on our 122-page report, here is the TL;DR on the state of CVC:

• ​Global CVC-backed funding rebounded 26% QoQ to reach $15B in Q1’24. Nearly half ($7B) of this funding came from $100M+ mega-rounds. Meanwhile, global deal volume was roughly flat, ticking up 1% QoQ to 851.

• CVCs participated in 33 $100M+ mega-rounds in Q1’24, tied for the highest total since Q3’22. The top 2 mega-rounds went to Wonder ($700M, with backing from American Express Ventures and Google Ventures) and Figure ($675M, with backing from Intel Capital, M12, NVentures, OpenAI Startup Fund, and Samsung Ventures).
• Early-stage companies have captured 66% of CVC deals in 2024 YTD, pacing at the highest share in over a decade. The increase is driven largely by Europe and Asia, which have seen 73% and 66% of deals this year go to early-stage companies, respectively. In the US, 59% of the year’s CVC deals are early-stage.
• CVC deals to fintech companies increased 41% QoQ to 165. This was the highest level since Q4’22. Blockchain investment firm OKX Ventures was the most active CVC across sectors, backing 27 total companies in Q1’24. Coinbase Ventures was also a top CVC last quarter with 11 companies backed, signaling a potential rebound in crypto-focused CVC activity. 
• CVC-backed funding in China fell to $0.3B, a 40% QoQ decrease. Deal volume also fell 14% QoQ to 78, its lowest level since Q1’20. Sungrow New Energy, a developer of renewable energy hardware, raised the largest round for China-based companies at $48M, with backing from CVC Zhongan Capital.

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Even so, median insurtech deal size is up in 2024 so far — signaling that investors are still willing to make notable bets where they see opportunities.

Here is the TL;DR on the state of insurtech:

• Insurtech funding falls 18% QoQ to hit $0.9B in Q1’24 — the lowest quarterly level since 2018. The decline was particularly pronounced in P&C insurtech, which saw funding drop by 25% QoQ. Meanwhile, broader insurtech deal count ticked up by 3% to reach 107 in Q1’24.

• No $100M+ mega-round insurtech deals are raised for the first time since 2018. Relatedly, late-stage deal share — which often comprises larger, mega-round deals — is down to 7% in 2024 so far. Hyperexponential, a pricing platform, raised the largest insurtech deal in Q1’24 — a $73M Series B round.
• Europe sees quarterly insurtech deal count rise for the first time since Q2’22. Europe-based insurtech startups raised 28 deals in Q1’24, up from 24 in Q4’23. Funding also more than tripled QoQ, rising to $284M in Q1’24. The region saw the 2 largest insurtech deals in Q1’24: Hyperexponential’s Series B round and embedded insurer ELEMENT’s $54M Series C round.
• Median insurtech deal size is $5M in 2024 so far, up 19% vs. $4.2M in full-year 2023. This elevated median deal size is partially linked to an uptick in median early-stage deal size, which sits at $3.2M in 2024 so far. Meanwhile, the average insurtech deal size in 2024 YTD ($9.8M) is down 17% from full-year 2023.
• Insurtech sees its fewest M&A exits since 2018. Exit activity has nearly halted in insurtech, with M&A exits declining from 13 in Q4’23 to just 5 in Q1’24. Comparatively, fintech M&A exits largely remained flat QoQ — ticking down from 153 in Q4’23 to 152 in Q1’24.

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Massive rounds to players like generative AI startup Anthropic were key drivers behind the jump, as overall AI deal volume dipped for the fourth straight quarter in Q1’24. 

Here is the TL;DR on the state of AI:

• Global AI funding reaches $13.1B. AI funding increased 24% QoQ to reach $13.1B — its highest quarterly level since Q1’23. This outpaced the growth in broader venture funding (+11%). Meanwhile, AI deals slipped for the fourth consecutive quarter, hitting their lowest quarterly count since 2018 (739 deals). This drop was particularly pronounced in Asia, which saw a 30% drop in deals QoQ.
  

• Average deal size YTD in AI is $23.1M, up 21% vs. $19.1M in full-year 2023. A couple of genAI infrastructure players have had an outsized impact on this upward trend, raising massive $1B+ deals: Anthropic ($2.8B Series D) and Moonshot AI ($1B Series B). Notably, Anthropic raised an additional deal worth $750M in Q1’24, bringing its total funding for the quarter to $3.5B.
• AI unicorn births remain steady at 6 QoQ in Q1’24. Three of these new unicorns are generative AI model developers: Moonshot AI, Together AI, and Krutrim all reached $1B+ valuations in Q1’24.
• AI M&A exits drop 36% in Q1’24. There were 69 M&A deals for AI companies in Q1’24, marking a 36% decrease from Q4’23. Amid the downturn, Europe saw its share of broader global exits rise by 12 percentage points QoQ, while Asia experienced a 15-point drop. Meanwhile, the US’ share remained steady at 41%.
• US AI funding rises 52% QoQ to reach $9.3B. Asia was the only other major global region to see a funding increase (+6%) in Q1’24. Funding totals for both regions were heavily buoyed by the $1B+ rounds to genAI infrastructure startups Anthropic (US) and Moonshot AI (China).

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Digital health funding grew 48% quarter-over-quarter in Q1’24. This growth was supported by an increase in $100M+ mega-rounds, which were largely directed at biotech startups and other players leveraging AI.

Despite the increase, however, total funding still came in below pre-pandemic levels in Q1’24. Meanwhile, deal count continued to trend down.

Based on our deep dive below, here is the TL;DR on the state of digital health:

• ​Global digital health funding increases 48% QoQ to reach $3.7B in Q1’24. However, funding was still down 12% vs. Q1’23 and 63% vs. Q1’22. Meanwhile, digital health deal count declined in Q1’24, dropping to its lowest quarterly level since 2014.
  
  
• Funding to US digital health startups rises 44% QoQ. However, the US also saw deals drop to 144 — the fewest in a quarter since 2013. Despite the decline, the US still saw the majority of global digital health deals (53%) and funding (70%) in Q1’24. The US also secured 6 out of 7 digital health mega-rounds in the quarter.
• Average digital health deal size is up 38% in 2024 so far. After dropping from $23.1M in 2021 to $11.9M in 2023, average deal size is up to $16.4M in 2024 so far. This is being driven in part by the resurgence of mega-round deals. In Q1’24, these deals accounted for their second-highest share of quarterly funding since 2022.
• Digital health sees 7 $100M+ mega-rounds in Q1’24. Digital health mega-round deals rebounded QoQ in Q1’24. The largest digital health deal of the quarter went to Freenome — a biotech company focused on cancer detection. While biotech drove the top deals, Q1’24 mega-rounds were spread across the digital health industry, from biomedical NLP to robotics for microsurgery.
• No new unicorns (private companies valued at $1B+) emerge. While Freenome added $1B to its valuation following its Series F mega-round in February 2024, the company had already attained unicorn status in 2020. Among Q1’24 mega-round earners, Abridge saw the largest increase in disclosed valuation. It reached an $850M valuation — up 350% from October 2023.

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Fintech deal volume, on the other hand, increased for the first time since Q1’23.

Based on our deep dive below, here is the TL;DR on the state of fintech:

• Fintech funding falls 16% QoQ to its lowest quarterly level since 2017. Quarterly funding declined to $7.3B in Q1’24, counter to the 11% rebound in the broader venture market. That said, fintech deals increased by 15% QoQ as investors focus on writing smaller checks.
  
  
• Average deal size YTD in fintech is $11.1M, down 18% vs. $13.6M in full-year 2023. A dearth of blockbuster deals is driving the decline: In Q1’24, there were just 12 mega-rounds (deals worth $100M or more) representing 26% of total funding — the lowest share since Q2’23, when it hit 23%. Nevertheless, these rare deals can reach a massive scale: the biggest fintech round in the quarter was UK-based challenger bank Monzo‘s $431M Series I deal — worth 6% of the global funding total. 
• Mid- and late-stage deals make up 20% of deals YTD, up from 18% in full-year 2023, as investors look to startups with more established track records. So far this year, investors are favoring later-stage companies to a greater degree than the past 2 years. The shift is most pronounced within specific sectors. In payments, for instance, mid- and late-stage deals make up 29% of deals YTD, vs. 21% in 2023. In digital lending, mid- and late-stage deals make up 40% of deals YTD, nearly double the 2023 total.
• Banking startups have a billion-dollar quarter. Banking funding doubled in Q1’24 to reach $1B across 38 deals. Five of the top 10 banking deals in the quarter were late-stage, and 2 were mega-rounds of $100M+. Besides the Series I deal for Monzo, Germany-based banking-as-a-service company Solaris raised a $104M Series F round.
• Europe fintech funding increases 22% QoQ to $2.2B. Europe was the only major global region to see fintech funding increase in Q1’24. The continent also led all regions with 37% of exits in the quarter. Meanwhile, funding declined 11% QoQ to $3.3B in the US, which still led all regions in total fundraising.

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Equity deal volume declined for an eighth straight quarter, but a handful of billion-dollar rounds — particularly in generative AI — helped drive funding up 11% quarter-over-quarter (QoQ).

Based on our deep dive below, here is the TL;DR on the state of venture:

• Venture funding climbs 11% QoQ to $58.4B. Q1 funding was buoyed by several massive deals, including Amazon’s $2.75B investment in generative AI company Anthropic. Despite the quarterly gain, funding remains down 21% vs. Q1’23 and 62% vs. Q1’22.
• Deals slide for an eighth straight quarter, down 7% to 6,238. Asia and Europe saw 8% and 9% declines, respectively, in VC deal activity. The US, on the other hand, bucked the global trend, seeing deals tick up 1% QoQ.
• Mega-rounds (deals worth $100M+) are a bright spot, growing 30% QoQ to 105. These large deals represented 45% of total funding in the quarter, up 11 percentage points from the previous quarter. Corporate investors like Amazon, Disney, and Alibaba were behind some of the largest deals. 
• The quarter sees 19 new unicorns spread across the US, Asia, and Europe, down slightly from 23 the previous quarter. Europe’s 5 new unicorns represented a 5-quarter high for the continent. The highest-valued unicorn birth in Q1’24 went to Figure, a humanoid robotics developer valued at $2.7B.
• The fintech sector takes a hit, with funding falling 16% QoQ, while digital health and retail tech see gains. Digital health funding surged by nearly 50% in Q1’24, driven by multiple biotech mega-rounds.
• Silicon Valley sees $4 out of every $10 in US funding. Silicon Valley startups drew $14.4B in Q1’24 — more than 3x the next US metro (New York with $4.4B) — to capture 42% of the country’s funding. While that figure was driven up in Q1’24 by Anthropic’s $3.5B in cumulative funding, it’s not an anomaly: Silicon Valley has seen over a third of all US funding since 2020.

Below, we’ll explore these themes across 8 charts.

Global venture funding grew 11% QoQ in Q1’24, bouncing back from a recent low to reach $58.4B. 

Despite the rebound, this figure marks a 21% decrease year-over-year and puts quarterly venture funding roughly where it was in 2017.

Meanwhile, dealmaking continued to slide in Q1’24. Equity deal volume slipped for an eighth straight quarter to 6,238, putting it in line with levels not seen since 2016/2017.

Globally, the US accounted for 39% of deals in the quarter — up 3 percentage points from Q4’23 — while Asia (31%) and Europe (24%) each lost 1 percentage point.

One of the bright spots in venture right now: mega-rounds (deals worth $100M+). These deals surged 30% QoQ (and 14% YoY) to hit 105 in Q1’24.

At $26.2B, funding from mega-rounds represented 45% of the quarter’s total funding — a rebound from 34% in Q4’23. 

The uptick in mega-rounds points to investors’ sustained interest in blockbuster deals, especially in capital-intensive areas like large language model development. 

Q1’24 saw 4 deals reach $1B or more in value, with 2 of these deals going to generative AI companies (Anthropic and Moonshot AI). Amazon and Alibaba led these respective deals, pointing to global tech giants’ rabid interest in genAI.

The other 2 deals worth $1B+ went to Epic Games and Generate Capital. Disney’s $1.5B stake in Epic is its biggest move into gaming yet, while Generate Capital’s $1.5B round will go toward developing sustainable infrastructure projects.

After falling precipitously throughout 2022, the number of new unicorns (private companies valued at $1B+) has mostly stabilized quarter-over-quarter. Q1’24 saw 19 new unicorns, down slightly from 23 the prior quarter.

The new billion-dollar companies in Q1 were distributed across the US (8 new unicorns), Asia (6), and Europe (5). 

Europe’s total, which represented a 5-quarter high in unicorn births for the continent, included new unicorns like Italy’s Bending Spoons ($2.6B valuation) and Netherlands-based Mews ($1.2B).

Some industries are seeing stronger funding momentum than others.

Digital health startups, for instance, saw funding soar 48% in Q1’24 to $3.7B. Top deals went to biotech firms Freenome ($254M Series F) and BioAge Labs ($170M Series D).

Fintech startups, on the other hand, drew 16% less funding in Q1’24 than the prior quarter. The fintech sector also saw its new unicorn count slip from 8 to 6 over the same period. Despite fintech’s funding losses, the sector was the only one to see an uptick in quarterly deal volume.

Silicon Valley remains the undisputed leader among US metros for VC activity. 

In Q1’24, Silicon Valley-based startups drew $14.4B in funding — 42% of the US total. This represented a 14-point surge QoQ in Silicon Valley’s share of funding, driven in large part by the excitement around AI. San Francisco-based Anthropic, an OpenAI competitor, was responsible for 10% of total US funding in the quarter.

Here are the funding totals for the top 5 US metros in Q1’24:

1. Silicon Valley: $14.4B
2. New York: $4.4B
3. Los Angeles: $2.5B
4. Boston: $2B
5. Raleigh: $1.6B (driven by Epic Games’ $1.5B round)

On a global scale, funding climbed 33% QoQ in the US — more than Europe’s 8% increase over the same period. Asia, meanwhile, watched its funding total fall 20% to $10.2B, putting it in the #3 spot behind second-ranked Europe.

The US accounted for 59% of total funding this past quarter — an increase of 10 percentage points from Q4’23. The top 3 largest deals in Q1’24 all went to US-based firms.

The post State of Venture Q1’24 Report appeared first on CB Insights Research.

At the same time, fewer new CVCs are emerging: just 162 CVCs were founded in 2023 — a 6-year low.

Based on our deep dive below, here is the TLDR on the state of corporate venture:

• CVC activity is down significantly from 2021’s highs, with CVC-backed dollars and deals sinking to $55.1B across 3,545 deals in 2023. The decline in funding with CVC participation has been especially pronounced, while dealmaking, despite falling 32% YoY, remains above where it was in 2019. 
• The US has been hit especially hard by the CVC retreat: Deal volume fell 25% QoQ to 233, a 6-year low, in Q4’23. This drove the US’ share of CVC deals down to just 29% among global regions — the lowest point in over a decade.
• A majority of the most active CVCs are based in Japan. The top 3 dealmakers in Q4’23 were all venture arms of Japanese financial services incumbents: Mitsubishi UFJ Capital (22 companies backed), SMBC Venture Capital (18), and Mizuho Capital (15).
• A generative AI company took the top CVC-backed deal in Q4’23. Aleph Alpha, a Germany-based LLM developer, raised a $500M round from investors including the venture arms of Bosch and Hubert Burda Media.
• Early-stage deal share has remained at an all-time high of 63% for 2 years running. CVCs are showing sustained interest in the earliest stages of startups, where they can form deep, long-term partnerships (and hopefully see greater financial returns in the long run).

Below, we’ll explore these themes across 5 charts.

CB Insights customers can dig into the latest corporate venture activity with this CB Insights platform advanced search.

2023 marked a precipitous drop in CVC activity globally, with funding and deals falling 46% and 32% YoY, respectively. This was roughly in line with the declines seen throughout the venture market more broadly.

Facing macroeconomic uncertainty, many CVCs are narrowing their bets on investment targets that align more closely with their parent orgs’ overarching strategies, as opposed to purely seeking financial returns.

The CVC pullback has been dramatic in the US, where deal volume slumped to just 233 in Q4’23 — a QoQ drop of 25%. 

Meanwhile, Asia and Europe saw growth in CVC activity in Q4’23, signaling the potential for a rebound in 2024.

The US’ share of global CVC-backed deals slipped below 30% for the first time in over a decade — while Asia’s share ticked up to a recent high of 42%. 

Globally, Japan stands out as the capital of CVC activity right now. The majority of the most active CVCs are based in the country, including the top 3 dealmakers in Q4’23: Mitsubishi UFJ Capital (22 companies backed), SMBC Venture Capital (18), and Mizuho Capital (15).

Across the broader venture market, Japan’s startups have been on a tear, notching consistently high deal counts each quarter despite the global downturn.

The generative AI boom has captured CVCs’ attention.

Germany-based Aleph Alpha, an LLM developer, took the top CVC-backed round of Q4’23 — with participation from the venture arms of Germany’s Bosch and Hubert Burda Media.

CB Insights customers can track every generative AI deal with corporate venture backing here.

One of the few bright spots in CVC right now is early-stage dealmaking. In 2023, 63% of all CVC deals were early-stage — maintaining the all-time high from 2022. 

CVCs are moving earlier in the startup lifecycle as they look to establish closer ties with emerging startups.

The post State of CVC 2023 Report appeared first on CB Insights Research.

Furthermore, despite the funding headwinds, insurtechs continue to see demand from strategic investors and acquirers. In Q4’23, for instance:

• Allianz and Allstate‘s venture arms invested a combined $265M in Next Insurance
• Travelers acquired Corvus Insurance for $435M
• Sumitomo Life took a majority stake in Singlife (which had previously merged with Aviva Singapore) at a $3.4B valuation

Based on our deep dive below, here is the TLDR on the state of insurtech:

• Global insurtech funding fell to $4.6B in 2023, the lowest level since 2017. Total insurtech funding fell 45% YoY, from $8.3B in 2022.
• A dearth of $100M+ mega-rounds drove the funding drop. Insurtech mega-round funding and deals fell by 64% and 63%, respectively, between 2022 and 2023.
• Quarterly insurtech deals have fallen by over 50% from their record high in Q2’21. Q4’23 saw just 100 global insurtech deals — a significant decline from mid-2021, when the sector saw over 200 deals in one quarter.
• Early-stage insurtech deal sizes held steady YoY at $3M in 2023. 62% of insurtech deals were early-stage in 2023 — a 5-year low in deal share after a spike to 70% in 2022.
• The US regained majority share of insurtech deals among global regions in 2023. US insurtech deal share ticked up to 51%, surpassing the 50% mark for the first time since 2020.

Below, we’ll explore these themes across 5 charts.

Global funding to insurtech startups fell 45% YoY to $4.6B in 2023, the lowest level since 2017 ($3.0B). The percentage drop in insurtech funding was greater than the decline in the broader venture environment (-42% YoY), although smaller than the drop in fintech funding (-50% YoY).

The funding declines were spread unevenly between insurance coverage areas:

• Funding to property and casualty (P&C) insurtechs fell 39% YoY, from $5.6B in 2022 to $3.4B in 2023.
• Life and health (L&H) insurtech funding fell by a greater degree — down 58% YoY, from $2.6B in 2022 to $1.1B in 2023.

The insurtech funding drop was driven by a decline in $100M+ mega-round activity. In 2023, insurtech mega-round funding fell 64% YoY to $1B, spread across just 6 deals:

• Next Insurance — $265M Series G
• Gravie — $179M Series F
• Devoted Health — $175M Series E
• Accelerant — $150M Series B
• Openly — $100M Series D
• Resilience — $100M Series D

This represented the fewest annual insurtech mega-rounds since 2017, when there were 5.

Global insurtech deals fell 19% QoQ to 100 in Q4’23, continuing a steady downward trend since Q2’21’s record high of 202. On an annual basis, 2023 saw 455 insurtech deals globally, a 6-year low. Broader venture and fintech deal counts also fell to the lowest levels since 2017.

Both P&C and L&H insurtech saw drops in the number of deals YoY, though P&C was less affected:

• P&C insurtech deals fell 25% YoY, from 451 in 2022 to 339 in 2023.
• L&H insurtech deals declined by 45% YoY, from 210 in 2022 to 115 in 2023.

2023 saw just 1 insurtech unicorn birth: Kin, a full-stack insurtech carrier focused on homeowners insurance, reached a $1B valuation in its $33M Series D round in September.

Insurtech exit activity fell 30% YoY, with 2023 seeing no insurtech IPOs for the first time in years. However, Q4’23 was notable for Travelers’ acquisition of Corvus Insurance — an insurtech managing general agent in cyber insurance — at a valuation of $435M.

Average insurtech deal size continued to decrease from 2021’s high, falling 24% from $15.9M in 2022 to $12.1M in 2023. The drop was driven by a downward trend in mid- and late-stage deal sizes.

Meanwhile, early-stage insurtech deals — which represented 62% of all insurtech deals in 2023 — saw no change in median deal size between 2022 and 2023.

US insurtech deal share rose 4 percentage points YoY in 2023 to 51%, once again giving the US a majority position in global deal share.

Even so, US insurtech deal count fell 31% QoQ to 48 deals in Q4’23 — the lowest quarterly level in years. Funding, on the other hand, ticked up to a 3-quarter high — largely due to mega-rounds for Next Insurance and Devoted Health.

The post State of Insurtech 2023 Report appeared first on CB Insights Research.

Based on our deep dive below, here is the TLDR on the state of AI:

• In 2023, AI startups raised $42.5B across 2,500 equity rounds. Although down 10% year-over-year (YoY), AI funding fell far less than broader venture funding (-42% in 2023). AI deal volume decreased by 24% YoY — also less than the decline seen in venture as a whole (-30%). However, the year’s 2,500 deals marked the lowest annual deal count in AI since 2017.
• The US saw AI funding jump 14% YoY in 2023, fueled by mega-rounds. AI funding in Europe, on the other hand, slipped 29%, while it fell a whopping 61% in Asia. The US continues to lead in AI deal share worldwide, with nearly half of all AI deals.  
• Generative AI dominated in 2023, attracting 48% of all AI funding. This was up significantly from 2022, when genAI startups grabbed just 8% of the total. 2023’s surge was driven by massive rounds to large language model (LLM) developers like OpenAI, Anthropic, and Inflection.
• AI deals got bigger in 2023, with the average deal size climbing 21% YoY to $23.4M. The median deal size also held steady YoY at $4.4M — the second-highest level on record — indicating that bigger checks are being doled out across the board, not just to a few AI heavyweights.
• M&A exits rebounded in 2023 to 317, a record high. The acceleration in M&A points to a wave of consolidation, as incumbents look to quickly bring AI capabilities on board so they don’t get caught on the back foot.
• The AI sector minted 22 new unicorns in 2023, down 39% from 2022. However, that’s a much softer decline than other sectors, like fintech and digital health, experienced over the same period. GenAI companies, in particular, are seeing their valuations soar as investors compete for access to deals.
• Google was the most active investor in AI in Q4’23, backing 9 AI startups. It was followed by KB Securities, Nvidia, and Plug and Play Ventures with 8 companies apiece, and then Lightspeed Venture Partners with 7.

Below, we’ll explore these themes across 7 charts.

Amid sweeping declines in venture activity, funding to AI startups remained resilient in 2023, falling just 10% YoY to $42.5B. One-third of this ($14B) was raised by just 3 companies — OpenAI, Anthropic, and Inflection — as the race to develop more advanced LLMs heats up.

In 2023, generative AI startups accounted for 48% of total funding to the AI sector — a far greater share than in any prior year. We expect genAI startups to maintain or even increase this in 2024, as the genAI boom is far from over.

AI deal volume decreased by 24% YoY in 2023. While less severe than the drop in venture deal count more broadly (-30%), this brought AI deal count to 2,500 last year — its lowest level since 2017. 

On a quarterly basis, AI dealmaking fell for a seventh straight quarter in Q4’23. At 554 deals, the quarter was the worst for AI dealmaking since Q2’17. Should this continue in 2024, it will have the effect of narrowing the AI field as investors home in on the companies they think will win out in the long run.

In 2023, US-based AI startups drew 73 cents of every dollar invested in the AI sector. 

The country saw AI funding jump 14% in 2023 — largely because of the previously mentioned model developers, which are all based in the US. The US also accounted for nearly half (46%) of AI deals in 2023, followed by Asia with 25% and Europe with 24%.

In Europe, AI funding dipped 29% YoY to $6.4B, though the continent has seen a steady stream of its own substantial deals. This included 2 mega-rounds (deals worth $100M+) in Q4’23: Germany-based Aleph Alpha’s $500M Series B and France-based Mistral AI’s $415M Series A. Both Aleph Alpha and Mistral AI are model developers competing with the likes of OpenAI.

Meanwhile, funding to Asia-based AI startups tumbled 61% YoY to $3.7B. However, the continent saw funding trend up on a quarterly basis in 2023, suggesting growing momentum. In particular, the United Arab Emirates grabbed 2 mega-rounds in Q4’23.

The proliferation of colossal AI deals — at times stretching into the billions of dollars — has pushed up the sector’s average deal size significantly. In 2023, this came in at $23.4M, up 21% YoY. 

However, the median deal size has also held steady YoY at $4.4M, suggesting that investor attention is spread across AI startups of all sizes and stages.

We’ve even seen early-stage rounds soar past the $100M+ mark — in Q4’23, 3 startups raised Series A mega-rounds:

• Mistral AI ($415M Series A)
• Baichuan AI ($300M Series A)
• Together ($103M Series A)

Notably, all 3 of these companies develop open-source models for generative AI. The deals come at a time when open-source models are closing in on closed-source ones in terms of performance. 

AI excitement has not only gripped investors but also corporations and tech leaders, who are driving a wave of consolidation in the space. M&A exits rebounded in 2023 to reach 317 deals — inching past 2021’s previous all-time high of 316. In many cases, incumbents are looking to add AI capabilities to their platforms; in others, AI leaders are snapping up the competition to capture market share.

The shift toward consolidation drove M&A activity to a new peak in Asia, which saw 54 M&A deals in 2023 — nearly double 2022’s count.

The 2 largest M&A deals in Q4’23 went to US-based companies:

• Corvus Insurance was acquired by Travelers for $435M. Corvus builds cyber risk offerings on top of AI algorithms.
• Gameplanner was acquired by Airbnb for $200M. Launched by one of the founders of Siri, Gameplanner has been operating in stealth since 2020, but it’s expected to work on AI projects within Airbnb.

While there’s been a rapid slowdown in the number of new unicorns across sectors, the excitement around generative AI has helped cushion the blow in AI.

Annually, 2023 saw 22 new AI unicorns, down 39% from 36 in 2022. For comparison, venture as a whole saw new unicorn births plummet 73% YoY — a decline of nearly twice the speed. Other sectors saw even more pronounced declines: -78% (fintech), -79% (digital health), and -88% (retail tech).

Within AI, generative AI companies are reaching unicorn status at hyper speed. Among genAI unicorns, it took just 3.4 years on average to hit the $1B valuation mark — 50% less than the average time for all other unicorns.

The most active investor in private-market AI right now is tech giant Google, investing in 9 AI startups in Q4’23 across its various venture arms. This included a $500M corporate minority round to Anthropic, as Google ups the ante in the big tech battle over genAI.

Google was followed by Korean investment bank KB Securities, Nvidia, and Plug and Play Ventures — all with 8 companies backed — and Lightspeed Venture Partners, with 7.

Google and Nvidia’s inclusion in the top 5 points to the strong link between these tech giants’ investment activity and their internal growth priorities.

Many of their recent investments are customers — e.g., organizations buying Google’s cloud computing power or Nvidia’s chips — and so the tech giants are helping seed their own books of business via these investments. Because of the strategic alignment, with Google and Nvidia both heavily prioritizing AI innovation, those portfolio companies could also make for future acquisition targets. 

The post State of AI 2023 Report appeared first on CB Insights Research.

Based on our deep dive below, here is the TLDR on the state of digital health:

• Global digital health funding halved for the second straight year in 2023, while deals dropped by more than a third. With just $13.2B raised across 1,397 deals in 2023, funding and deals fell to their lowest levels since 2016 and 2014, respectively. Amid the downturn, the US held its leadership position, attracting more than half of all deals.
• Despite the drops, median deal size remained at $4M — the highest on record. While median digital health deal size has trended up for more than a decade, venture deal sizes more broadly have deflated since 2021.
• Mega-rounds have all but disappeared from the digital health realm. There were just 3 $100M+ rounds in Q4’23 — the lowest count since 2016. On an annual basis, mega-round count hit 20 for all of 2023, falling well below even the quarterly average for 2021 (37 deals per quarter).
• The digital health unicorn herd started to shrink in 2023. Unicorn loss is outpacing unicorn births — a trend driven by a mix of startup exits, down rounds, and shutdowns. Despite the emergence of 4 new unicorns in 2023, digital health’s total unicorn count dropped from 97 to 94 over the course of the year. 
• Digital health M&A nearly doubled in Q4’23, indicating that consolidation is picking up in the market. If funding remains sparse and IPOs remain largely out of reach, M&A will become an increasingly attractive option for cash-strapped digital health startups.
• After falling out of the top investor rankings, Andreessen Horowitz returned to tie for the top spot in Q4. The investor backed 5 unique digital health companies in Q4’23, tying Plug and Play Ventures for the title of “most active.” Thanks to its digital health bets in Q4’23, a16z added yet another unicorn to its portfolio.
• Care delivery & navigation tech held on to its funding crown in Q4’23. With $837M raised in Q4’23, care delivery & navigation tech remained the top-funded digital health sector. It was followed by monitoring, imaging, and diagnostics tech with $501M.

Below, we’ll explore these themes across 7 charts.

Spurred by the onset of the Covid-19 pandemic — as well as the broader tech boom — digital health funding skyrocketed to unprecedented highs in 2021. However, as the pandemic has faded from public imagination, digital health startups have watched funding halve with each passing year, dropping by 52% year-over-year (YoY) in 2022 and 48% in 2023.

At $13.2B, digital health funding for 2023 stood at its lowest level since 2016. Quarterly funding levels have yet to give any indication of a recovery. Dollars to the space fell every quarter in 2023, dropping by 44% from Q1’23 to Q4’23. With just $2.3B raised in Q4’23, digital health startups saw their lowest quarterly total in 8 years.

While no major global region was spared from the downturn, Asia was hit the hardest. In 2023, the continent saw greater YoY drops in funding (-55%) and deals (-46%) than both the US and Europe. While US funding didn’t fare much better — nearly halving last year — the country continued to lead digital health funding by a significant margin, securing nearly 70% of global equity dollars to the space. Unsurprisingly, US-based startups also led on a quarterly basis, even grabbing all 10 top digital health deals in Q4’23. 

While funding has been falling at an even pace since 2021, the downturn in dealmaking is only accelerating with the pandemic in the rearview mirror. Deals to digital health startups dropped by 19% YoY in 2022 and 38% in 2023. Over the course of 2023, digital health startups raised just 1,397 deals — the lowest annual count in 9 years. Quarterly deal count in Q4’23 (243 deals) also hit its lowest level since 2014.

Although digital health investors may be more hesitant to strike a deal now than in 2021, they are putting even more skin in the game where they do see value. Median equity deal size remained steady at a record high of $4M in 2023, representing an 8% increase from the heady days of 2021. This stands in stark contrast to venture at large, which saw a 22% decrease in median deal size over the same period. In digital health, the rise in deal size is particularly pronounced among Asia- and Europe-based startups — both groups have watched median deal size climb over the past 2 years.

Digital health investors may be willing to bet more cash on promising startups, but the upper dollar limit for many has dropped. Mega-rounds (deals worth $100M+) have all but disappeared from the digital health landscape. In Q4’23, just 3 of these deals were inked — the lowest count since 2016. Alongside deal count, quarterly mega-round funding also dropped to an 8-year low of $400M.

Digital health mega-round funding has fallen even further than funding to the space at large. It was down by 96% from its Q2’21 peak in Q4’23, while broader digital health funding decreased by 85% over the same period. So while mega-rounds regularly contributed more than half of the market’s funding in 2021, that share dropped to just 17% in Q4’23 — the lowest since 2019.

The post State of Digital Health 2023 Report appeared first on CB Insights Research.

Based on our deep dive below, here is the TLDR on the state of fintech:

• Global fintech funding nosedived to $39.2B in 2023 (down 50% YoY), while deal volume slipped 38% to 3,801 — the lowest levels since 2017. On a quarterly basis, Q4’23 saw the fewest fintech deals in 7 years.
• The US increased its dominance of fintech, drawing 41% of deals in 2023 — its highest share since 2016. Meanwhile, Asia’s deal share fell to a recent low of 20%. The uptick in US deal share came as investors shifted toward early-stage companies: early-stage deal share in the US climbed to its highest level in more than a decade.
• At 612 deals, annual M&A exit volume remains higher than it was any year prior to 2021. Quarterly M&A deals saw a modest gain in Q4’23, rising to 149. Europe saw 34% of these deals — more than any other global region — but the top 3 M&A exits in Q4’23 all went to US fintechs.
• Eight fintech unicorns were born in Q4’23 — a 6-quarter high, but far below 2021’s quarterly average. Asia contributed half of the new unicorns — 3 of which are based in Gulf States. This was the first time since 2019 that more fintech unicorns were born in Asia than in the US in a given quarter.
• Investment to banking startups has evaporated, with funding falling 72% in 2023 — the biggest YoY decrease across fintech sectors. Payments startups saw funding decline just 30% YoY — the least of any fintech sector — though the annual funding total was propped up by 2 massive rounds to Stripe ($6.5B) and Metropolis ($1B). Payments remains the most well-funded fintech sector by a wide margin.

Below, we’ll explore these themes across 7 charts.

Globally, funding to fintech startups fell 50% YoY, slipping below $40B for the first time since 2017. Fintech fared worse than the broader venture market, which saw funding decline 42% YoY in 2023.

The average and median deal sizes in fintech continued to decrease from 2021’s highs, falling to $13.8M and $3.2M, respectively, in 2023.

Among global regions, LatAm and Europe saw the largest drops in fintech funding in 2023:

• LatAm funding slid 68% to $1.2B
• Europe funding fell 64% to $6.5B

Q4’23 was a particularly harsh quarter for fintech in terms of deal activity.

The quarter saw fintech startups secure just 740 deals — the fewest in a quarter since Q4’16, and the third straight quarter of declines. 

Among the top deals of the quarter, payments solutions for online and in-person shopping were prominent. These included SumUp ($307M Series F), as well as buy now, pay later players Tamara ($340M Series C) and Tabby ($200M Series D). Notably, payments leaders Checkout.com and PayPal invested in the deals to Tamara and Tabby, respectively.

Despite global declines in deal volume, the US picked up a greater share of deals in 2023 at 41%. The 4-percentage-point increase came at the expense of Asia, which lost 3 percentage points in share YoY. The US’ share was the highest for the country since 2016.

Fintech dealmaking in the US has shifted toward the early stages (seed/angel and Series A), which now claim 70% of all US deals — the highest annual share in more than a decade.

While down from a peak in Q1’22, M&A activity remains relatively steady for fintech startups. Financial services incumbents, larger fintech firms, and PE buyers continue to seek out undervalued assets. In Q4’23, global M&A volume ticked up to 149 deals.

While Europe led in M&A deal share in Q4’23 at 34%, the top 3 M&A deals that quarter all went to US-based firms:

• In capital markets, TMX Group acquired VettaFi for $1.1B
• In insurance, Travelers purchased Corvus Insurance for $435M
• In business payments, WEX acquired Payzer for $261M

Eight fintech companies reached unicorn status (valued at $1B+) in Q4’23. Among global regions, Asia led with 4 of these new unicorns, followed by the US with 2. LatAm and Oceania each accounted for 1.

This was the first time since 2019 that Asia outpaced the US in the number of new fintech unicorns in a single quarter.

Within Asia, the Gulf States saw especially strong representation. Two unicorns (Tabby and Tamara) came out of Saudi Arabia, while the United Arab Emirates contributed one (Andalusia Labs).

Within fintech, banking startups’ access to capital has been restricted substantially. In 2023, they raised $2.2B in equity funding, down 72% from $7.8B the year prior.

Wealth tech funding wasn’t far behind, with a decline of 61% YoY in 2023. 

Funding to payments startups, on the other hand, remains relatively strong, down just 30% in 2023. The top equity deal in Q4’23 went to parking management and payment platform Metropolis, which raised over $1B.

While fintech funding fell across every global region in 2023, Africa was the least affected by the downturn. Africa-based startups drew $0.8B in funding in 2023, down just 27% from 2022.

Meanwhile, the continent’s early-stage deal share declined to a recent low of 83% in 2023. While the vast majority of deals are still early-stage, this trend suggests a growing contingent of companies are maturing into later stages of funding.

Across the whole year, the top 2 deals in Africa went to North Africa-based startups: Egypt-based MNT Halan ($260M Series D) and Morocco-based Cash Plus ($60M round). The third-largest round went to Kenya’s M-Kopa ($55M round).

The post State of Fintech 2023 Report appeared first on CB Insights Research.

However, the down market has revealed a handful of areas that remain notably resilient, from AI- and sustainability-focused startups to M&A deal flow in Europe.

Based on our deep dive below, here is the TLDR on the state of venture:

• Venture funding falls to $248.4B in 2023, the lowest since 2017. Global deal volume also tumbled 30% YoY to 29,303 in 2023, a 6-year low. The declines were felt across most major global regions and sectors. However, the fintech and retail tech sectors saw modest gains in funding in Q4’23.
• US deal volume at a 10-year low. The venture downturn has had a chilling effect on the US tech ecosystem. US-based companies raised just 2,182 equity deals in Q4’23 — down 21% QoQ to the lowest quarterly level since 2013.
• Late-stage deal size has fallen more than 50% since 2021. Investors have become more selective and are shying away from large, late-stage rounds. The median late-stage deal size is now $21M, a far cry from 2021’s $50M. Similarly, the number of mega-rounds (deals worth $100M+) in Q4’23 fell to its lowest level since 2017.
• Fewest annual VC-backed IPOs since 2013. With less than 200 VC-backed IPOs globally in 2023, the market for VC-backed IPOs remains mostly closed, especially in the US. Meanwhile, at 8,351 deals in 2023, M&A volume has fallen from a 2021 peak but remains elevated historically. 
• 2023 sees 71 new unicorns — a 7-year low, and down 73% from 2022. The number of private companies reaching $1B+ valuations remains well below where it was even before the pandemic. However, 23 hit that mark in Q4’23, a rebound from the previous quarter’s 14. Among 2023’s new unicorns, roughly half (35) came from the US. Asia and Europe contributed 18 and 12, respectively. 
• Generative AI and sustainability tech companies take the majority of top deals in Q4’23. Investors are looking to ride the AI wave to potentially substantial long-term returns. This is fueling a funding frenzy among generative AI developers, which dominated the list of top equity deals in Q4’23, alongside sustainability tech players.

Below, we’ll explore these themes across 15 charts.

The venture downturn accelerated in 2023, with global VC funding falling 42% — 8 percentage points more than the previous year’s decline — to $248.4B. This marked the first time annual venture-backed funding slipped below the $250B mark since 2017.

Venture deals faced similar headwinds. Deal count fell 30% YoY to reach 29,303 in 2023 — a 6-year low.

The onslaught is even more apparent on a quarterly basis. Q4’23 saw $51B in equity funding across 6,169 deals — the lowest quarterly figures since Q1’17 and Q4’16, respectively.

Globally, deal volume is now less than half what it was at its peak in Q1’22, as macroeconomic uncertainty continues to rattle investors.

The US, Asia, and Europe all saw double-digit percentage declines in quarterly funding in Q4’23. However, funding in the US has fallen further than in other major regions since the start of Q1’23.

Additionally, while the US led in global deal share with 35% in Q4’23, it lost several percentage points compared to the prior quarter, while Asia (33%) and Europe (25%) each picked up a few points.

Elsewhere in Q4’23:

• Canada funding grew 20% QoQ to $1.2B
• LatAm funding fell 33% QoQ to $0.8B
• Oceania funding held steady at $0.7B
• Africa funding slipped to $0.3B, down 40% QoQ

Venture investors are now being much more sparing with their dry powder than they were in the FOMO-driven tech boom of 2021/early 2022. They’ve also doubled down on due diligence, which is driving up the time it takes to close any one deal.

All this has taken a toll on the US venture market. In Q4’23, total deals to US-based companies slipped to a 10-year low of 2,182 deals.

Investors are also shifting their portfolios toward early-stage companies. Across 2023, early-stage deal share hit a recent high of 65% in the US. In Silicon Valley, that level was up to 74%, or roughly 3 in 4 deals.

Among US metros, Silicon Valley still reigns supreme, consistently accounting for 20%+ of US deals every year for the past decade. This figure has trended down slightly over time, but Silicon Valley’s share is still over 7 percentage points higher than that of New York, the next-largest metro for deal volume.

It’s not all doom and gloom. Among the sectors we analyzed, retail tech and fintech saw equity funding increase by double-digit percentages in Q4’23. 

Fintech also saw 8 new unicorns in Q4’23 — more than retail tech (3) and digital health (2) combined.

However, alongside digital health, fintech and retail tech both saw a double-digit percentage drop in deal volume in Q4’23, pointing to a broader pullback in investor attention.

One of the biggest shocks to the venture system has been the decline of massive funding rounds. Mega-rounds (deals worth $100M+) were a hallmark of 2021, with 350+ occurring each quarter.  

In Q4’23, that figure fell to just 78 — the lowest level since 2017. Unsurprisingly, mega-rounds now account for a significantly smaller share of overall funding. In Q4’23, this came in at 34%, tied for the lowest level since 2014.

Notably, investors like Tiger Global Management and SoftBank, which plied late-stage startups with mega-rounds in 2021, have pulled back dramatically on their dealmaking.

The drop in mega-rounds, which have historically gone to later-stage companies, has also had the effect of vastly reducing the median late-stage deal size. This has fallen by over 50% since 2021 to reach just $21M in 2023. 

Mid-stage median funding hasn’t fallen as much since 2021, though it did see a greater drop YoY (down 25%). 

Meanwhile, the median early-stage deal size was relatively resilient in 2023, holding steady at $2M.

Plug and Play’s venture arm, Plug and Play Ventures, topped the list of most active investors in Q4’23, backing 39 unique companies. It was followed by France-based asset manager Bpifrance with 28.

Meanwhile, two corporate VCs (CVCs) made the top 10: Mitsubishi UFJ Capital (22 companies) and SMBC Venture Capital (18). Both are venture arms of Japanese banks.

There are also some notable absences from the list of most active investors, such as Tiger Global and SoftBank. These 2 crossover investors were everywhere in 2021, when they backed over 500+ equity deals between the two of them. In all of 2023, they did less than one-tenth of that, backing 46 deals.

At 70%, early-stage rounds (seed/angel and Series A) in 2023 tied the previous year for the highest deal share in over a decade. 

In the past 2 years, some investors have pivoted to focus more on early-stage companies, which are arguably more protected from market volatility than late-stage companies closer to the point of exiting. 

Meanwhile, other investors have doubled down on an existing early-stage focus. Several of the top investors in Q4’23 — including Plug and Play Ventures (No. 1 ranking), Antler (No. 6), and Gaingels (No. 6) — work primarily with early-stage companies.

Parallel to this, we’re seeing YoY growth in activity from the world’s top accelerators.

Europe edged out the US to maintain its lead in exit share (39%) for a fifth straight quarter. The continent primarily sees M&A deals worth less than $1B, while deals any larger than that are concentrated in the US or Asia.

Europe also reached a recent high in its quarterly share of global equity deals, at 25%.

The steady stream of M&A deals continued in 2023, which saw over 8,000 deals — the third-highest level on record, following each of the previous 2 years. This comes as many startups run out of cash runway and as tech buyers with stronger balance sheets look to capture market share. 

However, billion-dollar M&A deals are few and far between, with just 8 such exits in Q4’23. The top 2 deals went to pharma incumbent Roche, which acquired therapeutics developers Telavant ($7.3B valuation) and Carmot Therapeutics ($3.1B).

Notably absent from the top M&A deals table is big tech. Increasing regulatory scrutiny has quieted many of the historically acquisitive tech giants, with the recently scrapped Adobe-Figma deal throwing on even more cold water. Overall, the pullback has restricted a potential exit route for startups.

Globally, 2023 saw just 170 VC-backed IPOs — the fewest in a decade. The vast majority of these came from Asia, with around half of them going to China-based companies.

Even for those companies that did make their debut, it sometimes came at a cost. The top-valued IPO in Q4’23, for instance, went to Indonesia-based J&T Express, which was previously backed by Boyu Capital, Tencent, and Temasek, among others. It grabbed a $13.5B valuation, down from its $20B valuation in 2021.

Just a fraction of 2023 IPOs went to US companies. Many investors hoped the September IPOs of former tech unicorns Instacart and Klaviyo would trigger a rush of other IPO filings, but these stocks’ underwhelming performance may have intimidated hopeful candidates in the near term.

However, a recent stock rally for chip designer Arm, which also went public in September, could encourage others to follow, especially as tech stocks continue to post strong results more broadly.

The largest equity deals in Q4’23 reflect 2 central focus areas for venture investors at the moment: generative AI and sustainability-focused tech.

In sustainability, the focus is on renewable energy (Envision Group’s $1B Series B; Electric Hydrogen’s $380M Series C) and sustainable packaging (Footprint’s $830M round).

In genAI, all 3 top deals went to large language model (LLM) developers, with 2 of these (Aleph Alpha and Mistral AI) building European competitors to OpenAI. 

2023 saw just 71 new unicorns (private companies reaching the $1B+ valuation mark) — a precipitous drop from the year prior.

On a quarterly basis, Q4’23 saw 23 new unicorns, reflecting a 64% increase QoQ from Q3’s 14. Even so, this figure remains far below even pre-pandemic levels. 

In Q4’23, the US contributed 10 of the 23 new unicorns, followed by Asia with 7. Notably, MENA saw an uptick in new unicorns, with Saudi Arabia-based fintech companies Tabby and Tamara, as well as UAE-based blockchain platform Andalusia Labs, all hitting $1B+ valuations.

We dig into the future of the unicorn club here.

Despite a $1B round for Envision Group, quarterly funding to China-based companies reached its lowest figure since 2014 in Q4’23. The same was true of deal volume.

In the past couple of years, China’s tech market has been squeezed by stringent domestic regulations, escalating geopolitical tensions, and a pessimistic economic outlook.

However, China’s tech firms are betting big on generative AI to give them a competitive edge. 

Tech firm Baidu announced last week that its Ernie chatbot, a competitor to ChatGPT, had reached 100M users. And China saw 2 generative AI companies reach unicorn status in Q4’23: 01.AI and Baichuan AI. Both companies are large language model (LLM) developers that have released open-source models.

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