Venture capitalists are still investing in good companies, despite some challenges faced by founders in raising funds. Down rounds, where a company raises funds at a lower valuation than the previous round, are still prevalent, with about 39% of late-stage deals being down rounds. However, late 2024 has seen an increase in megadeals, with Crunchbase reporting nearly 240 funding rounds of $100 million or more for U.S.-based startups, surpassing the total for the previous year.
Interestingly, the top category for these megadeals is not AI, but biotech and healthcare startups. Biotech and healthcare accounted for 87 mega-deals, while AI came in second with 26 deals. Some of these deals are a combination of AI and healthcare, such as Xaira Therapeutics, which raised $1 billion for AI drug discovery. Superluminal Medicines, focusing on finding medications for specific small molecule receptors, raised $120 million in a Series A round.
In addition to biotech and healthcare, cybersecurity is another sector seeing an increase in mega-rounds, with 16 such deals so far this year. Email security startup Kiteworks, data security startup Cyera, and cloud security startup Wiz are some examples of companies raising substantial amounts of funding.
For founders at earlier stages, there are positive signs as well. Pre-money valuations for seed and Series A deals have slightly improved in the first half of the year. Deal-making activity in 2024 is also on par with 2023, with just under 16,000 deals reported.
TechCrunch Disrupt 2024 will feature sessions on raising a Series A in the current environment and how to navigate fundraising in 2025 after a flat, down, or extension round. These sessions aim to provide valuable insights for entrepreneurs looking to secure funding for their startups.
