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Global VC fundraising showed signs of improvement in the third quarter, but the amount raised from January to September was the smallest nine-month total in the past five years.
For the first three quarters of this year, venture funds raised a little less than $83 billion, down from more than $95 billion in the same period last year and an all-time high of about $150 billion in the first nine months of 2022, according to exclusive research by Venture Capital Journal.
The year started on a sour note, with a meager $16 billion raised in Q1, the lowest quarterly figure since Q3 of 2017. It appeared things were getting back to normal by the end of June, with $51 billion raised in the first half of the year. At that time, VCJ noted that if the Q2 pace continued through the rest of the year, the full-year total could match 2023. Now, assuming that Q4 is about the same as Q3, the year-end total could come in around $115 billion, the same amount raised in 2020, which was the lowest annual total in the past five years.
This is not to say that the Q3 numbers shouldn’t give fundraisers a glimmer of hope. The $32 billion total was the second-largest quarterly figure in the past five quarters – and nearly double what VCs raised in Q1.
Warning signs
What should give fundraisers pause is the decline in the number of venture vehicles getting raised, a figure made up of closed-end funds, separately managed accounts and side funds. After hitting a record of 1,724 in 2021, the number of VC vehicles raised annually dipped to less than 1,300 in 2022 and about 1,000 in 2023.
So far this year, mangers have closed on 636 venture vehicles. To match last year’s total, they would need to close on 57 percent more vehicles in the fourth quarter than they did in Q3.
Another number that should give fundraisers pause: 18. That’s the average number of months firms spent marketing their funds before holding a final close this year. (Note that the data is only for those funds that disclose it.) The amount of time VCs spend on the road has risen sharply since 2021, when the average was eight months. It grew to 11 months in 2022 and 15 months last year.
Bigger average
Driven by larger and fewer funds getting closed this year, the average fund size hit a record high of $168 million in the first nine months of this year. That is up from $139 million for the full-year 2023 and $155 million for full-year 2022. Substantially more (eight) billion-dollar-plus funds closed in Q3 than in the first quarter (one) or second quarter (four).
Europe gains on Asia
As was the case in H1, North America remained the top region of focus and Europe continued to gain on Asia as the second most popular region of interest (not including multi-regional funds). Funds focused on North America raised 49 percent of the total in the first nine months of the year, followed by multi-regional (23 percent), Asia-Pacific (15 percent), Europe (13 percent), and Middle East/North Africa (1 percent). The only two regions to show gains from last year are Europe, which improved by 3 percentage points from 2023, and Asia-Pacific, which increased by a single percentage point.
In market for $240bn
Funds still in market are seeking a combined $240 billion, the same amount they were targeting at the end of Q2. Funds focused on North America are at the top the list (seeking a combined $120 billion), followed by Asia-Pacific ($53 billion), multi-regional ($34 billion), Europe ($25 billion), MENA ($3.8 billion), Latin America ($2.5 billion) and Sub-Saharan Africa ($1.2 billion).
ARCH shares top spot
Perhaps the biggest change from the second to third quarter was the number of funds of $1 billion or more on our top 10 list. There were just four at the end of H1. Now 13 funds have that distinction. Joining Norwest as the largest fundraiser year-to-date is ARCH Venture Partners, with each having closed on $3 billion funds. Running a close second and third are Flagship Pioneering and HongShan (formerly known as Sequoia Capital China), which raised $2.6 billion and $2.5 billion, respectively.
Check out our interactive fundraising report above for the full breakdown of fundraising activity in Q3 2024. You can download the report as a PDF here or download the data here.
Click the top right of presentation to view full screen
Global VC fundraising showed signs of improvement in the third quarter, but the amount raised from January to September was the smallest nine-month total in the past five years.
For the first three quarters of this year, venture funds raised a little less than $83 billion, down from more than $95 billion in the same period last year and an all-time high of about $150 billion in the first nine months of 2022, according to exclusive research by Venture Capital Journal.
The year started on a sour note, with a meager $16 billion raised in Q1, the lowest quarterly figure since Q3 of 2017. It appeared things were getting back to normal by the end of June, with $51 billion raised in the first half of the year. At that time, VCJ noted that if the Q2 pace continued through the rest of the year, the full-year total could match 2023. Now, assuming that Q4 is about the same as Q3, the year-end total could come in around $115 billion, the same amount raised in 2020, which was the lowest annual total in the past five years.
This is not to say that the Q3 numbers shouldn’t give fundraisers a glimmer of hope. The $32 billion total was the second-largest quarterly figure in the past five quarters – and nearly double what VCs raised in Q1.
Warning signs
What should give fundraisers pause is the decline in the number of venture vehicles getting raised, a figure made up of closed-end funds, separately managed accounts and side funds. After hitting a record of 1,724 in 2021, the number of VC vehicles raised annually dipped to less than 1,300 in 2022 and about 1,000 in 2023.
So far this year, mangers have closed on 636 venture vehicles. To match last year’s total, they would need to close on 57 percent more vehicles in the fourth quarter than they did in Q3.
Another number that should give fundraisers pause: 18. That’s the average number of months firms spent marketing their funds before holding a final close this year. (Note that the data is only for those funds that disclose it.) The amount of time VCs spend on the road has risen sharply since 2021, when the average was eight months. It grew to 11 months in 2022 and 15 months last year.
Bigger average
Driven by larger and fewer funds getting closed this year, the average fund size hit a record high of $168 million in the first nine months of this year. That is up from $139 million for the full-year 2023 and $155 million for full-year 2022. Substantially more (eight) billion-dollar-plus funds closed in Q3 than in the first quarter (one) or second quarter (four).
Europe gains on Asia
As was the case in H1, North America remained the top region of focus and Europe continued to gain on Asia as the second most popular region of interest (not including multi-regional funds). Funds focused on North America raised 49 percent of the total in the first nine months of the year, followed by multi-regional (23 percent), Asia-Pacific (15 percent), Europe (13 percent), and Middle East/North Africa (1 percent). The only two regions to show gains from last year are Europe, which improved by 3 percentage points from 2023, and Asia-Pacific, which increased by a single percentage point.
In market for $240bn
Funds still in market are seeking a combined $240 billion, the same amount they were targeting at the end of Q2. Funds focused on North America are at the top the list (seeking a combined $120 billion), followed by Asia-Pacific ($53 billion), multi-regional ($34 billion), Europe ($25 billion), MENA ($3.8 billion), Latin America ($2.5 billion) and Sub-Saharan Africa ($1.2 billion).
ARCH shares top spot
Perhaps the biggest change from the second to third quarter was the number of funds of $1 billion or more on our top 10 list. There were just four at the end of H1. Now 13 funds have that distinction. Joining Norwest as the largest fundraiser year-to-date is ARCH Venture Partners, with each having closed on $3 billion funds. Running a close second and third are Flagship Pioneering and HongShan (formerly known as Sequoia Capital China), which raised $2.6 billion and $2.5 billion, respectively.
Check out our interactive fundraising report above for the full breakdown of fundraising activity in Q3 2024. You can download the report as a PDF here or download the data here.
