Q2 venture capital investment data is out, and there is some promising news. CB Insights has released its State of Venture Report, looking back at the last quarter. The highlight of the report is, of course, AI, which continues to dominate as a major area of interest for investors. CB Insights data shows that 28% of all VC dollars went to AI startups, reaching the highest quarterly share on record. Q2 saw $18.3 billion go to AI startups, up an impressive 32 percent QoQ. This was primarily driven by several deals valued at over $1 billion.
Data also shows global venture funding is up for the second quarter in a row, with 8 percent growth QoQ. VC investment came in at $64.7 billion for Q2. However, deal volume is still down globally, less than half what we saw at the peak during Q1 of 2022.
While volume might be down, deal size rose by 17 percent. The average deal size was $14.4 million, a 17 percent jump from the average in 2023. CB Insights points out that even in today's more cautious environment, the deals that are getting done have “ballooned in size as investors put more behind select startups.”
Regarding exit activity, the US accounted for 39 percent of global exits, tying with Europe. This includes M&A and IPOs and is a gain of 4 percentage points QoQ.
Investment in startups in Asia declined QoQ, falling below $10 billion for the quarter for the first time in over a decade. The largest drop was in China, which saw investment fall by more than half QoQ. In contrast, India, Singapore, and Japan all saw investment rise.
Juniper Square has also released some analysis of the PitchBook-NVCA Venture Monitor First Look for Q2, indicating that while still early, the data hints at signs of a much-needed recovery. They point to 155 VC funds recording a successful close in Q2, the first time that number has been over 150 since Q4 of 2022.
There is some caution here, as Juniper's analysis notes that each quarter that showed an upward trajectory for the past six quarters was followed by a downward quarter. So, it is important to see what the data looks like in Q3 before we know if we are on track for a real recovery. But there is quite a bit of good news here that will hopefully continue into Q3 and beyond.
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