Overall outlook
Heading into 2024, the conditions for raising venture capital will continue to be challenging. We expect we will see many companies compete to fundraise in 2024. There are a large number of companies in the pipeline that haven’t raised since 2021 and will need to raise more capital. VC firms have prioritized their portfolio companies and are starting to do new deals.
In what could be a positive sign for the future, however, corporate investors signalled they may be planning to ramp up their activity in the corporate venture capital space. In a recentEY pulse survey, 93% of CEOs said they plan to increase (70%) or maintain (23%) investment in corporate venture capital funds in 2024, which expands the pool of capital and could lead to an off ramp through mergers and acquisitions.
The massive upcycle that fueled the venture capital market in recent years has made entrepreneurship appear easy. It’s not — and certainly isn’t getting easier. Investors are taking time to get to know the founders, their markets and plans for the future. That said, great companies with resilient entrepreneurs and clear paths to growth and profitability will continue to find a way forward.
Tips for entrepreneurs navigating fundraising in this environment:
- With no immediate rebound in sight, founders will need to shift gears and focus on taking care of themselves and their teams.Provide the right level of emotional support. It’s a marathon, not a sprint, and that requires physical and mental stamina to compete in a crowded market and in challenging times.
- Be open to different views on valuations. Markets may have changed significantly since you last raised a round of capital. Don’t let that get in the way of raising a round, doing a strategic deal or anything that allows you to fight another day.
- Continue to seek out solid advice and counsel from investors, board members and fellow entrepreneurs.
Despite the challenges of the past two years, this is not the end of entrepreneurship. But as the ecosystem works through a down cycle, which we haven’t seen in some time, those entrepreneurs who are prepared to do the hard work of managing their capital carefully and building a profitable, resilient company will be the ones who distinguish themselves, attract investment and ultimately succeed.
FAQs
The top three trending sectors—information technology, healthcare/biotech, and business and financial services—ushered in funding rounds over $100 million into 2024, providing optimism for a resurgence in deal activity. The renewable energy sub-sector is also seeing promising activity.
Does venture capital pay well in 2024? ›
While ZipRecruiter is seeing annual salaries as high as $199,000 and as low as $34,000, the majority of Venture Capital salaries currently range between $71,500 (25th percentile) to $119,500 (75th percentile) with top earners (90th percentile) making $165,500 annually across the United States.
What is the venture debt outlook for 2024? ›
We estimate the US market for both venture capital and debt to be about half the global total, suggesting that global venture debt in 2023 will be around $20–25 billion, and will be over $30 billion in 2024.
What is the seed round valuation for 2024? ›
Valuations: Typical seed round valuations in 2024 land between $1M to $15M. Runway: Seed capital should last 12-24 months on average, depending on your burn rate.
What are the hottest industries for venture capital? ›
Some of the industries trending include healthcare, information technology, and business and financial services. Additional sectors seeing significant VC investment are technology, biotech, renewable energy, fintech, real estate, and e-commerce.
What will the market look like in 2024? ›
Fortunately, analysts see positive earnings and revenue growth for all eleven market sectors this year. The healthcare sector is expected to generate a market-leading 17.8% earnings growth in 2024, while the information technology sector is expected to lead the way with 9.3% revenue growth.
How much does a partner at a VC make? ›
Junior Partners are likely to earn around the $500K level (or less), with General Partners in the $500K – $1 million range in terms of salary + year-end bonus. And it's possible to earn less than $500K or more than $2 million; these are more like the 25th and 75th percentile markers, not absolute min/max numbers.
How much does a VC principal make? ›
Venture Capital Principal Salary, Bonus, and Carried Interest Levels. Base salaries and year-end bonuses depend heavily on the firm's size and age, but the total compensation range at the “average” VC firm is $250K – $400K USD.
Does venture capital have a future? ›
We expect we will see many companies compete to fundraise in 2024. There are a large number of companies in the pipeline that haven't raised since 2021 and will need to raise more capital. VC firms have prioritized their portfolio companies and are starting to do new deals.
Is venture capital slowing down? ›
The slowdown in VC deal activity, which started in Q3 2022, has continued into Q1 2024. In Q1, $36.6 billion was invested in 3,925 deals, which was at a level comparable to 2023. For all of 2023, $165.8 billion was invested across 15,580 deals.
Outlook for 2024–2034
The growth of real GDP slows to a rate of 1. 5% in 2024 as inflation continues to decline and the federal funds rate falls. After 2024, real GDP grows at a moderate pace.
What is the startup funding trend in 2024? ›
Signs point to 2024 being an excellent environment for well-equipped private market investors and proven, promising startups. Current VC activity is on pace with 2023 numbers and generally back to pre-pandemic levels. Deal activity is healthy, there's a high level of dry powder, and innovation continues to surge.
How much revenue is needed for a seed round? ›
Average seed round by industry – examples
According to Finmark, most seed rounds today are around $1-$4 million. In Europe, as of December 2021, healthtech and software firms raised the most in seed funding, with fintech doing especially well.
What is the future of venture capital? ›
We expect we will see many companies compete to fundraise in 2024. There are a large number of companies in the pipeline that haven't raised since 2021 and will need to raise more capital. VC firms have prioritized their portfolio companies and are starting to do new deals.
What is the equity market outlook for 2024? ›
Moving forward, the market is likely to remain sensitive to political developments, but the long-term outlook remains positive given the fundamental strength of the economy and robust corporate performance.
What are the expectations for private equity in 2024? ›
Private equity firms will focus on five key trends in 2024. Deploying artificial intelligence will lead the way, followed by investment in infrastructure particularly related to energy projects. Value creation will also be a priority as firms seek to improve strategic and operational efficiency.
How is the venture capital market doing? ›
The venture market remains challenged in the first quarter of 2024 amid macroeconomic crosscurrents and the rate of down rounds continuing to rise. Even so, there are some positives including healthy levels of innovation happening and an upward trend in seed valuations.
