CEO and CRO met a decade ago in college and began building different ventures together. After a few pivots, they raised funding for New York-based Flip in 2018 with the goal of building AI that 鈥渁nswers and automatically resolves routine requests鈥� for customers calling into a variety of businesses. They started with a focus on transportation companies and moved into retail in 2021 and healthcare in 2024.

AI-based customer service is a saturated space, but Schiff claims Flip鈥檚 approach is differentiated because it鈥檚 a vertical one that is very focused on just three industries.

Among vertical players, Schiff claims that Flip has an advantage because its AI 鈥渋s battle-tested on more than 300 million phone calls.鈥�

and co-led the round for Flip, which says it has raised a total of $31 million in funding. also participated in the round, alongside , , and a group of angel investors. Flip declined to reveal valuation, saying only that it was up 3x compared to its seed raise.

Year-over-year growth

Today, Flip has hundreds of enterprise customers, including , , and global transportation companies. The company has reached an eight-figure ARR, growing 3x year over year, according to Schiff.

Interestingly, the idea for Flip came when Schiff and Krut were students at . They had built a ride-hailing app called Red Route for calling taxis at Cornell, at a time when was still banned in upstate New York. It was during that experience they came up with the idea for what is today Flip.

鈥淐ustomer service is one of the obvious AI categories for business, and we’re talking on a daily and weekly basis with the largest brands on the planet,鈥� Schiff said. 鈥淓ven for them, it’s not a question of 鈥榠f.鈥� It’s a question of 鈥榳hen鈥� and 鈥榳ith whom.鈥欌��

That, he said, has created 鈥渁 huge amount of noise鈥� in the market.

Over the past year or so, a number of what Schiff described as 鈥済eneric AI providers鈥� popped up.

鈥淭he great irony of this space right now is that while all of the headlines and much of the funding has gone into these generic platforms that are trying to be the AI everything for everyone, across every industry, every channel, every use case. In reality, most of the actual traction, most of the successful customer stories, are working with vendors like Flip that are going very deep into one or a couple of specific industries,鈥� Schiff told 附近上门 News in an interview.

Another differentiator, in his view, is that few companies have developed deep expertise with AI telephone customer service.

鈥淢ost people are doing it inside of chatbots or auto email responders,鈥� he said. 鈥淲e really look at the quality of the experience. It doesn’t matter how nice it is to talk to 鈥� it’s still just another bot that’s in the way of a customer trying to solve their problem.鈥�

When it comes to the revenue model, Flip doesn鈥檛 charge an upfront cost or require a long-term commitment. Rather, it charges per automated call 鈥� a usage model it has implemented since its early days.

鈥楢 vertical approach yields the best results鈥�

, managing partner at , believes that customer service is one of the few huge markets where generative AI has produced tangible results for enterprise customers and a better experience for users.

鈥淏ased on our 30+ years of investing in software, we believe a vertical approach yields the best results,鈥� he wrote via email. 鈥淔lip has taken a different approach than many others by focusing on a couple of verticals and going really deep 鈥� While there are plenty of competitors making noise, some are going after different parts of the market, and Flip has quietly, up to now, launched more live customer deployments, at scale, than anyone.”

, co-founder and managing director at , said he has spent nearly two decades in and around call centers and voice technologies and has 鈥渘ever seen a more compelling ROI for customers鈥� than what Flip offers.

He added: 鈥淭he founding team is exceptional, customer feedback has been tremendous, and the potential for Flip to become a $1 billion business is clear.鈥�

Smerklo said he is also impressed with the company鈥檚 capital-efficient approach to growth.

鈥淪everal other companies that have raised tremendously more money have to rely on ‘forward engineering’ to get their product to work for customers,鈥� he said. 鈥淔lip’s solution works, doesn’t require a massive investment from customers, and solves real, salient business issues.鈥�

Related 附近上门 query:

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Startup investment has doubled over the past 10 years to roughly $300 billion globally per annum, 附近上门 data shows. Now the question remains: As the AI wave plays out, creating more value over the next decade, could that figure double or more again?

Since 2014, three major trends have pushed venture capital investment higher.

First, startup investment has expanded well beyond the sprawling office parks of Silicon Valley and towers of San Francisco, with more than half of startup capital invested outside the U.S. starting in about 2016. Only more recently has that shifted back, with the U.S. pulling in 56% of investment last year, thanks to massive funding deals to AI companies including and .

Second, megarounds 鈥� those funding deals of $100 million or more 鈥� have come to dominate startup investing, with more than half of all funding last year going into such outsized deals.听

And finally, funding to artificial intelligence-related companies topped $100 billion in 2024 鈥� accounting for an astonishing third of global funding, thanks to numerous billion-dollar-plus funding deals to AI startups.听

These three trends all point to technological advances playing a larger role in society and driving increased revenue to the companies that shape their industries. The rise of the and the tech-heavy index over the past decade also underscore the revenue and value creation from the tech industry.

The 2021 anomaly

Increasingly, 2021 can be viewed as an anomaly, when funding to startups doubled year over year 鈥� notching the biggest jump in venture investment since 附近上门 started tracking this data. That increase in funding spilled into the first quarter of 2022 鈥� as the cratering of public technology stock values was under way, and new public listings were at a standstill.听

Setting 2021 aside, the venture ecosystem more than doubled between 2024 and 2014. But that growth actually represents a slowdown from earlier waves of tech investment: In the preceding 10-year span of 2010 to 2020, investment grew 7x, albeit starting from a smaller base.

Over the past 15 years, 2014 showed the second-biggest year-over-year growth, at 76%. Then, the startup world was seven to eight years into the cloud and mobile investment wave and six years past the 2008 financial crisis.听

The decade-long increase in funding to private startups has tracked with the Nasdaq composite index, which reached above 4,000 in 2013, a level not seen since the dot-com boom year of 2000. The index continued to grow, despite market corrections in 2018, 2020 and 2022. At the end of 2024, the index closed at 19,310.听

Venture expands beyond the U.S.

Venture funding has also become increasingly international, although the AI boom has partially reversed the trend in just the past few years.

In 2010, the U.S. dominated global venture funding. By 2016, the rest of the world surpassed U.S. funding levels. In more recent years, U.S. headquartered startups accounted for just under 50% annually.听

Last year, thanks to the dominance of AI by U.S.-based companies, funding swung back again, with U.S.-based startups receiving 56% of global venture capital spending.

The rise of megarounds

As the decade progressed, we鈥檝e also seen the growth in megarounds of $100 million or more. Since 2016, such rounds have accounted for 40% or more of startup funding. That figure peaked in 2021 at 59% of funding to venture-backed startups.听

In 2024, more than 50% of funding went to rounds $100 million or more. That was also true in 2018 and 2020.听

In line with the growth of megarounds, funding rounds below $50 million have shrunk as a portion of overall venture dollars since 2010, 附近上门 data shows. Then, rounds of $50 million or less represented an overwhelming majority 鈥� 72% 鈥� of global venture capital. By 2015, that had dropped to just under half, or about 47%. Last year, only 38% of capital went to venture-backed startups with rounds at that size.

, a general partner at venture firm , said he expects megarounds to continue to grow, as it continues to become easier and faster to build AI products.听

鈥淭he result will be larger companies, growing faster and more efficiently than we鈥檝e ever seen before,鈥� he said via email. 鈥淯nfortunately, that also means failure rates will be higher as there will be more companies overall and tech/IP moats will not serve as defensible barriers anymore, but the companies that succeed will be much larger at $100 billion to $500 billion unlike the last cohort of $2 billion to $10 billion IPOs.鈥澨�

Deal counts shift听

As a proportion of the number of deals, rounds of $50 million and more peaked in 2021 at 9% of all deals. In the past two years, these deals were between 4% to 5%, but still represent a greater proportion than they did a decade earlier.听

Deals from $5 million and below $50 million represented a larger share of deal counts since 2021, while deal proportions under $5 million contracted.

Funding the new

Despite the growth in megarounds, and the spike in 2021, funding between $5 million and up to $50 million has still represented a third of funding since 2022.

The importance of the first and second big checks starting at $5 million and more persisted through the decade.听听

听听

The AI wave听

Funding to private AI-related companies, which includes AI labs, AI infrastructure and tooling as well as applied AI startups in 附近上门鈥檚 dataset, topped $100 billion in 2024. AI-related companies received a third of global funding last year, according to 附近上门 data.听

This was up from $57 billion in 2023 and around the same amount in 2022. AI funding in the U.S. represented 45% of 2024 funding.听听

We鈥檙e still early in this new wave of artificial intelligence and only two to three years into funding generative AI, which will take an investment cycle of 10 to 20 years to play out across many sectors. As it does, it will听impact health, manufacturing, robotics, defense, services and software.听

鈥淚 expect AI to expand the software / tech addressable market by a factor of 2-3x to $2 trillion to $3 trillion, bucking the trend of 2-3% GDP aligned growth the last couple of decades,鈥� said Thakker.听

AI is already creating opportunities in new markets and intense competition as industries are reshaped with a more advanced technology layer.听

鈥淗uman labor contributes a magnitude more to our GDP than software does, and as human labor is augmented and somewhat automated by AI, I expect software and the venture ecosystem to be big beneficiaries of this trend creating many decacorns in public markets that look like and ,鈥� Thakker said.听

With generative artificial intelligence expected to play out over a 10-20 year investment cycle, the question now remains: Will VC investment continue to grow at the rate seen over the past decade, or even accelerate with the AI wave? And will venture capital continue to back companies at the earliest stages?

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Four of the top six venture markets in the region saw declines. Along with China, India, Singapore and Japan all sank lower. Only Israel and Japan saw upticks as the region continues to battle economic fluctuations, conflicts, geopolitical tensions and a possible trade war.

Let鈥檚 take a look at exactly what鈥檚 happening in the region as we break down some of its biggest venture markets by country.

China

China鈥檚 venture market has continued to decline as the country鈥檚 鈥渄eflationary spiral鈥� has not subsided and now a possible trade war with the U.S. swirls.

The venture funding market has precipitously declined since just after COVID, with just a quarter here or there that saw a slight uptick.

The first quarter of 2025 was not one of those outliers, as China鈥檚 share of venture was almost halved from just a year ago. Chinese startups raised only $6.5 billion, compared to $12.5 billion in Q1 2024 and $8.2 billion in Q4.

However, the region鈥檚 largest late-stage deals all came from China, including:

• Waste disposal firm raised a $692 million venture round in March;
• , which provides internet-enabled solutions for the textile industry, raised a $460 million Series C in January; and
• China-based , a startup creating AI models and a Chinese competitor to , raised a $247 million private equity round last month.

How China鈥檚 venture market goes obviously dictates how the Asia market will go 鈥� as it is easily the richest. The decline in China funding has directly led to the region鈥檚 dropping numbers.

For those looking for good news from the world鈥檚 second-largest economy, it has been that Zhipu AI aims to go public as soon as October. Perhaps a strong showing will bring money back into the country鈥檚 burgeoning AI sector.

However, Zhipu is on the 鈥檚 export blacklist for allegedly contributing to China鈥檚 military. That illustrates yet another issue in the region 鈥� difficulty securing U.S. investment, something the current tensions between the two countries will not change.

More decreases

Of course, China was not alone in Asia鈥檚 venture decline.

Venture dollars in India 鈥� the region鈥檚 second-biggest market 鈥� dropped 26% year to year, with startups pulling in only $2.8 billion in Q1 this year. That鈥檚 even down slightly from the $3 billion it saw in the final quarter of last year.

The country did see two of Asia鈥檚 biggest raises outside of China, though, as mining firm locked up a $244 million venture round in Q1, and commerce platform raised a $173 million corporate round from .

Similarly, both Singapore and South Korea saw drops. Singapore鈥檚 fall was more pronounced, declining about 80% from both Q1 and Q4 last year. Startups in the country raised a minuscule $400 million last quarter.

South Korea-based startups saw about a 38% drop in funding from Q1 2024, raising only $500 million.

The upmarkets

Only two venture markets in Asia posted a Q1 increase from the year earlier.

Israel saw a 38% hike to $1.1 billion in the quarter from the $800 million raised in Q1 2024. That was in part thanks to Israel-based raising a $170 million Series C led by .

Israel-based startups saw an even bigger bump from the $700 million raised in Q4 last year.

The quarter marked an impressive comeback for Israel鈥檚 venture market 鈥� which took a hit in 2024 as the country was mired in violent conflict with Hamas and other groups in the Middle East.

Japan also saw a slight increase, as its Q1 venture funding hit $600 million, up from $500 million in Q1 last year, but down more than half from the $1.3 billion raised in Q4.

Venture capitalists in Asia have a unique set of obstacles they must confront if the region is to get its private market back on track. While China sets the pace for the region, many other venture-rich countries helped push last quarter鈥檚 decline even deeper.

It may get worse before it gets better for investors.

Related reading:

• Q1 Global Startup Funding Posts Strongest Quarter Since Q2 2022 With A Third Going To Massive OpenAI Deal听听
• Asia Sags To Lows Not Seen Since 2014
• China Leads Asia鈥檚 Venture Downturn 鈥� But Other Countries Didn鈥檛 Help

Illustration:

Global venture investment in 2024 was above the pre-pandemic year of 2019, but below 2018 and 2020 amounts at $346 billion and $350 billion, respectively.

Table of Contents

• Breakout year for AI
• Q4 push
• Large values, billion-dollar rounds
• US gained, Silicon Valley fired up
• Late-stage Q4 boom
• Early stage flat
• Seed settled
• Liquidity hold-up
• Methodology
• Glossary of funding terms
• Related reading

Breakout year for AI

One thing was clear: 2024 was the breakout year for funding to AI companies.

Close to a third of all global venture funding went to companies in AI-related fields, making artificial intelligence the leading sector for funding. Funding to AI-related companies reached over $100 billion 鈥� up more than 80% year over year from $55.6 billion in 2023 鈥斕浇厦� data shows. Funding to the AI sector in 2024 surpassed every year in the past decade, including the peak global funding year of 2021.

Of those AI dollars, almost a third of all AI funding went to foundation model companies.

The other two-thirds of funding went to sectors impacted by these new models. Infrastructure and data provisioning to manage and operate AI grew. Other leading sectors included autonomous driving, healthcare, robotics, professional services, security and military, 附近上门 data shows.

Q4 push

The higher total in 2024 was due to a big push in Q4 鈥� which saw the highest funding total since the downturn in Q3 2022. The fourth quarter reached $93 billion, up 36% year over year from $69 billion in Q4 2023 , based on an analysis of 附近上门 data.

In recent years, Q4 was typically slower. The 2024 fourth quarter, however, closed with the largest rounds raised this year 鈥� $22 billion by three companies.

Large values, billion-dollar rounds

In 2024, a greater share of funding went to billion-dollar rounds, in large part driven by funding to the AI sector. In 2024, $58.3 billion 鈥� or 19% of all funding 鈥� went to billion-dollar rounds. Compare that with 2023, when $45.8 billion 鈥� or 15% of funding 鈥� went to rounds of a billion dollars or more.

The fourth quarter picked up steam with the largest valuations achieved last year. was awarded a $157 billion valuation. was valued at $62 billion in the year鈥檚 largest venture deal, a $10 billion round. And doubled its valuation in a six-month period, to $50 billion.

Not surprisingly, the largest funding rounds this past year went to companies in the AI sector 鈥� not only Databricks, OpenAI and xAI, but also and raised funding of at least $4 billion 鈥� or much more.

Other large valuations to companies in AI went to ($19 billion), Anthropic ($18.4 billion), ($14 billion), ($13.8 billion) and ($9 billion).

US gained, Silicon Valley fired up

Venture funding to U.S. companies totaled $178 billion 鈥� around 57% of total global funding. The U.S. funding market raised a greater proportion of global funding, up from 48% in 2023.

Of all U.S. funding, $90 billion was invested in the corridors of the San Francisco Bay Area, which experienced a boom from AI investing. Compare that with 2023, when Bay Area companies raised $59 billion in total funding.

Late-stage Q4 boom

Late-stage funding in the fourth quarter reached $61 billion, up more than 70% quarter over quarter and an increase year over year from the $36 billion invested in Q4 2023, 附近上门 data shows. The biggest change in Q4 from a year earlier was the increase in billion-dollar rounds. Large fundings were raised in multiple sectors such as AI, applied AI, energy, semiconductor, banking, security and aerospace, among others.

Early stage flat

Early-stage funding was flat in Q4. Large early-stage rounds went to data centers, renewable energy, AI, robotics and biotech.

Seed settled

Seed funding trailed in Q4, for now. Reaching $7 billion in Q4, seed funding was down 16% from the $8.4 billion invested a year ago. (However seed fundings are often added to the 附近上门 dataset after the close of a quarter, and should increase over time.)

Liquidity hold-up

It was a slow year for exits in 2024.

M&A activity was slightly up compared to 2023 鈥� but slower than expected and somewhat concentrated in biotechnology and cybersecurity companies.

Of the magnificent seven,, and hired AI teams from , and , respectively, as the regulatory environment impeded strategic dealmaking. was the most active acquirer in 2024 among this cohort.

The IPO market 鈥� also slow in 2024 鈥� ended on a positive note with the unexpected bump from the IPO, which as of the new year is above its IPO price by more than 40%.

An opening up of the IPO markets in 2025 will drive LP allocation to venture, said , a partner at Sapphire Partners, in an interview. 鈥淗istory just shows very clearly that when there’s positive liquidity, more money goes into venture funds,鈥� she said.

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data. Data reported is as of Jan. 3, 2025.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Related reading

• OpenAI Raises $6.6B At $157B Valuation
• Databricks Raises $10B In 2024鈥檚 Largest Venture Funding Deal
• The 10 Biggest Rounds Of November: xAI And Anthropic Raise Billions Again
• AI Cloud Infrastructure Startup CoreWeave Raises Huge New Round At Reported $19B Valuation
• Anduril Industries Valued At $14B After $1.5B Series F
• Scale AI Raises $1B In Accel-Led Round; Hits $13.8B Valuation
• SpaceX Shooting For $750M Round At $137B Valuation 鈥� Report
• Forecast: 2024 Was Slow For Tech IPOs, But 2025 Could Be Different
• What We Learned About AI From 7 Active Startup Investors This Year

Illustration:

October turned out to be a pretty busy month for many of the big names in venture and was led again by .

Other investors such as and followed closely,听 all investing in 11 or more rounds involving U.S.-based companies.

Interestingly, none of those firms took part in the big round of the month 鈥� 鈥檚 massive $6.6 billion raise 鈥� but they all clearly found a lot of other deals to their liking.

Andreessen Horowitz, 14 deals

Few firms have been as busy as Andreessen Horowitz. In the three months before October, the Menlo Park, California-based giant made 32 deals involving U.S.-based startups.

A16z had its busiest month of the year in October, taking part in 14 rounds with U.S. startups. The biggest was in New York-based mortgage servicing platform 鈥� $100 million Series C led by .

The largest round the company led was a $51.5 million Series C for San Francisco-based , which has developed an AI platform specifically built to automate manual healthcare phone calls.

General Catalyst, 12 deals

General Catalyst also had one of its biggest months with a dozen deals announced, which tied with April.

While that鈥檚 impressive, what is perhaps most notable is the two huge rounds it led 鈥� or co-led 鈥� in a three-day span.

On Oct. 25, it led a $900 million Series A for , a startup attempting to create a nuclear fusion-based energy source. It quickly followed that on Oct. 28 by co-leading cybersecurity startup 鈥檚 big $200 million Series D along with .

Lightspeed Venture Partners, 11 deals

Continuing our theme, Lightspeed also invested in more rounds involving U.S.-based startups last month than in any other month so far this year. That included taking part in the big Pacific Fusion round.

It also took part in the $135 million Series D for San Francisco-based , a legal tech startup creating artificial intelligence products for the personal injury sector.

The largest domestic round it co-led was payment processing startup 鈥檚 $75M Series C along with and .

Sequoia Capital and Alumni Ventures, 9 deals each

Unlike the other firms on this list so far, neither nor set year-high marks for investments last month.

However, that鈥檚 not to say they didn’t take part in some notable rounds.

Alumni participated in 鈥檚 $150 million Series B. The Redondo Beach, California-based space startup is developing a line of orbital transfer vehicles 鈥� also called 鈥渟pace tugs鈥� 鈥� which serve as a last-mile cargo delivery service once payloads get into orbit.

Sequoia helped New York-based teletherapy startup lock up a $125 million Series F that values the startup at $1.7 billion. Maven partners with employers and health plans to provide clinical support concerning preconception, family building, pregnancy, parenting and menopause.

Also notable:

• came in next on the list with eight deals.
• Lightspeed Venture Partners and General Catalyst led the way in most led or co-led deals in October with six each.
• led the list for number of rounds led or co-led with the highest dollar amounts with two at more than $6.6 billion 鈥� including OpenAI鈥檚 long-awaited raise of $6.6 billion at a post-money valuation of $157 billion.
• once again was the top investing incubator and accelerator with 18 deals in October.

Related reading:

• AI, Data Center And Energy Startups Get Large Capital Infusion In October
• OpenAI Raises $6.6B At $157B Valuation
• Cyber Startup Armis Security Raises $200M At $4.2B Valuation
• AI Legal Tech Startup EvenUp Raises $135M To Hit Unicorn Status

Methodology

This is a list of investors which took part in the most rounds involving U.S.-based startups. It does not include incubators or accelerators due to the fluctuations their investment numbers can have.

Illustration:

Altogether, companies in South and Central America raised $791 million in reported seed- through growth-stage financing in Q2 of 2024, per 附近上门 data. That鈥檚 a rise of 25% from the prior quarter and 17% from a year ago.

Recent gains follow an unusually weak Q1, in which funding to the region hit a multi-year low. And while the latest numbers look stronger, we鈥檙e still far below the heights reached during a record-breaking run in 2021, as charted below:

Meanwhile, reported deal counts were down for the quarter, although we did see an encouraging pickup in volume at the early stage. We鈥檒l also expect the seed round counts to rise a bit over time as well as more previously unreported deals are added to the database.

All about fintech

As overall investment rose in Q2, fintech led the recovery. The four largest funding recipients of the quarter were all fintechs, including:

• , a Brazilian provider of banking tools for businesses, closed on $120 million in Series C financing in June.
• , a Mexico City-based provider of technology for merchants to accept digital payments, secured $100 million in a June financing, its first equity round since 2021.
• , a Brazil-based provider of loyalty and promotion tools for retailers, picked up $74 million in a May financing led by .
• , a Mexico City-based provider of tools for merchants to offer installment plans to customers, secured $70 million in equity funding in May led by .

Fintech鈥檚 strength isn鈥檛 entirely surprising. The sector has long been a top area for regional investment. It was the top area for investment last quarter too.

However, we did see companies in other spaces raise good-sized rounds in Q2. For example, , a Brazilian data and AI consultancy, landed $40 million in financing backed by . And , an insurance platform, pulled in a $22.5 million Series A.

Late-stage up, early-stage stable

Late-stage saw the biggest improvement in overall funding. Reported investment at Series C and beyond听 $291 million – roughly double Q1 levels and a nearly 6X gain from a year ago.

While these may look like eye-popping gains, it鈥檚 not quite such a striking turnaround in broader context. Both Q1 of 2024 and Q2 of 2023 were anomalously weak quarters for late-stage dealmaking.

At early-stage, investment levels have been more stable. In the second quarter, investment totaled $386 million 鈥� up a bit from Q1 and down a bit from year-ago levels. Overall, we鈥檝e seen less fluctuation of investment at early-stage than late-stage, where one or two large deals can significantly impact the totals.

Getting better

Overall, data points to an improving climate for venture investment in Latin America鈥檚 leading startup hubs. Funding at every stage rose in Q2 from the prior quarter.

The rebound was particularly pronounced for Mexico, with roughly $230 million into known rounds, up from less than $40 million the prior quarter.

Still, funding to Latin America remains over 80% below its peak in Q2 of 2021. Unicorn creation is still sluggish. And we haven鈥檛 seen many big exits for venture-backed companies. Even if we don鈥檛 expect to retrace those former highs, it looks like there鈥檚 still plenty of room left to rebound.

Illustration:

Both early and late-stage funding was up 鈥� with a notable increase in late-stage funding.

For the first time in a decade, quarterly funding to European startups was higher than in Asia. According to a recent 附近上门 report, Asia-based startups suffered their worst quarter since the final quarter of 2015, not helped by the tension between the U.S. and China.

Table of contents

• AI led in Europe
• Late-stage grew
• Early-stage up
• Seed tailed
• M&A in Paris
• Good signals
• Methodology
• Glossary of funding terms

Across Europe, the UK was the leading market with $6.7 billion and France the second largest with $2.9 billion in funding 鈥� both markets up year over year. The third largest market, Germany, was down this past quarter with $1.8 billion going to startups there.

AI led in Europe

AI was the leading industry in Europe with $3.3 billion invested in Q2. Large rounds went to London-based automated driving company , Paris-based foundation model , and Cologne-based language translation platform .

The second largest sector was financial services, totaling $3 billion. Three U.K.-based companies raised large rounds: lending platforms and as well as digital bank .

Sustainability was the third largest in Europe with $2.5 billion invested as renewable energy companies raised mega-rounds north of $100 million.

Late-stage grew

Late-stage funding reached $7.5 billion across more than 100 rounds. Funding was up the most quarter over quarter and year over year, but it was not the highest quarter in the last year.

Ever since funding began to slow down a couple years ago, quarterly totals have fluctuated as late-stage funding surged or fell. This is true for the past five quarters, charted below:

Early-stage up

Early-stage funding reached $6.5 billion across just over 300 funding rounds. Series B funding showed the largest increase year to year at this stage.

Seed tailed

Seed stage funding reached $1.8 billion, across 900 rounds, down from $2.3 billion in Q2 2023.

M&A in Paris

Paris-based startups generated some of the largest acquisitions this past quarter.

London-based PE firm acquired a majority stake in Paris-based employee hub for $650 million. Social network , also from Paris, was acquired by mobile gaming company for just over $500 million. And not the largest deal, but of interest in the AI sector, was Belgium-based AI legal drafting service , purchased by U.S.-based for $160 million.

Good signals

Three companies from Europe joined the unicorn board in Q2, down from five in Q1. They include Paris-based business forecasting service , Berlin-based auto parts retailer , and London-based no-code app developer . European unicorn companies number on The 附近上门 附近上门.

And in good news for European venture, fintech unicorn posted its 2023 earnings showing strong revenue growth 鈥� 95% year over year. The company reported $2.2 billion in revenue for 2023 and a profit of $545 million alongside 12 million new customers. Revolut was last valued at $33 billion in 2021.

Overall, European startups posted a pretty good quarter, showing an increase in late-stage funding to mature startups. We also saw the most prominent sector, AI, take the lead for funding in Europe, and a positive sign of substantial revenue growth from one of the region鈥檚 most highly valued private companies, Revolut.

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data. Data reported is as of July 7, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Illustration:

The region suffered its worst quarter for venture funding since the final quarter of 2015, with Asia-based startups raising only $14.6 billion 鈥� a 24% decline from Q1 and a 32% dropoff year to year.

In addition, deal volume in the region continues to decline, with only 1,511 funding deals announced in Q2. That number represents a 15% drop from Q1 and a more pronounced 27% fall from Q2 last year.

Late-stage rounds continue to slide

Of course, what really moves the needle are the late-stage growth rounds. However, growth rounds in Asia totaled only $14.6 billion 鈥� the lowest in a quarter since 2019.

That number represents a steep decline of 24% from Q1 and an even bigger 32% dip from Q2 2023.

Unlike other regions that saw billion-dollar rounds, Asia was left out of the big-money craze, although there were a handful of deals in the quarter worth more than a half-billion dollars:

• China-based , an electric-vehicle startup, locked up a $690 million venture funding round.
• Indian grocery delivery startup raised a $665 million round, doubling its valuation to $3.6 billion.
• China-based , a semiconductor company focused on chipsets in mobile communications and IoT, raised a round worth approximately $552 million.

Dealmaking volume also fell, with only 134 late-stage growth rounds in Q2. That鈥檚 a 21% drop from Q1 and a 14% decline year to year.

Early-stage funding suffers

While any type of significant decline in venture is almost always directly attributable to late-stage funding, there also was an eye-catching fall in early-stage dealmaking.

Early-stage dollar volume fell to only $4.9 billion 鈥� a staggering 53% decline from the first quarter and a 39% dive year to year.

Dealmaking volume diminished only slightly, with 539 rounds being announced in Q2. That number reflects declines of only 7% from Q1 and 16% from Q2 of last year.

Seed does not sprout

To be honest, with the above numbers looking like they do, seed and angel funding certainly weren鈥檛 going to save the region鈥檚 venture funding totals. While such rounds may produce interesting deals, they are not big money.

Angel and seed actually were up slightly both quarter to quarter and year to year, totaling $1.9 billion 鈥� slightly above Q1鈥檚 $1.7 billion.

However, deal flow shrank to only 834 deals 鈥� a 19% drop from Q1 and a 34% decline from Q2 2023. In fact, it鈥檚 the lowest amount of seed and angel deals in at least a few years.

Decline by country

This region is dominated by one player: the Red Dragon.

That dragon did not breath fire this past quarter, as venture funding in China plummeted. Venture funding in the country hit only $6.9 billion 鈥� down an eye-popping 46% from Q1 and 33% from Q2 2023.

India, by far the region鈥檚 second-largest venture market, saw $3.4 billion of funding. That represents a 27% uptick from Q1, but a 9% drop from Q2 last year.

What it means

The shrinking of the venture market through the last handful of quarters is shocking. While everyone knew 2021鈥檚 high could not be sustained, it seemed inevitable the drop in dollar volume would subside.

However, despite a brief respite in the middle of last year, the market has continued in reverse and seems to be entering back to where it was a decade ago.

Even AI 鈥� the latest craze among all venture capitalists today 鈥� could not save the Asian venture market. AI-related startups in the region raised only about $2.5 billion, . That鈥檚 a pittance when compared to North American AI-focused startups, which.

While some AI firms, such as China鈥檚 and South Korea鈥檚 , raised big rounds well over nine figures, there just simply were not enough of them.

The trade and investment tensions between China and the West, along with the region鈥檚 continuing rocky economy, are not helping.

China鈥檚 regulatory policies around venture and IPOs likely also have not helped, but recently there have been of officials willing to change that to jump-start the declining market. It was recently that mainland China IPOs raised only $4.6 billion in the first six months of the year 鈥� a drop of 85% from H1 2023.

Such actions likely will be needed if the region is to stop its downward tumble.

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data. Data reported is as of July 7, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Illustration:

Overall, investors put $45.3 billion into seed- through growth-stage financings for U.S. and Canadian startups in the second quarter of 2024. That鈥檚 a 30% rise from the prior quarter and a 35% jump from the same period last year.

For perspective, we charted out total funding, color-coded by stage, for the past 14 quarters below:

Looking at the chart above, the big picture that emerges is one of a venture ecosystem that 鈥� while still far below the 2021 peak 鈥� is rising steadily from its low point late last year.

But it鈥檚 an uneven recovery, as some sectors sputter and others soar. Artificial intelligence remains the runaway favorite investment theme, as AI-focused startups . A single company, , accounted for over a quarter of all early-stage funding.

Meanwhile, investment activity remains down or muted for a host of other areas, including enterprise software, consumer products, and fintech. Additionally, the number of reported deals actually fell in Q2, hitting the lowest point in years, as illustrated below:

To get a better sense of how the quarter played out, below we look at investment at each stage, as well as exits, including both acquisitions and public offerings.

Late-stage investment

We鈥檒l start with late-stage investment, which was up slightly in the second quarter.

A total of $19.4 billion went into late-stage and technology growth investments in Q2 鈥� up 11% quarter over quarter and 23% year over year. At the same time, deal counts declined slightly, as charted below:

Three companies scored late-stage rounds of $1 billion or more. The largest round went to , an AI cloud infrastructure startup that raised led by .

Two others raised billion-dollar rounds: , a data labeling and evaluation startup, and , a cloud cybersecurity provider.

While funding rose, thanks in part to continued enthusiasm for all things AI-related, the number of completed deals actually declined. There were an estimated 201 reported late-state and technology growth round counts in Q2, which is the lowest total in years.

Early stage

Early stage posted the sharpest gains in Q2, with $22 billion invested. That is an increase of 60% from the prior quarter and 56% from year-ago levels.

Round counts, meanwhile, were relatively flat. For perspective, we charted out deal counts and investment totals for the past five quarters below:

Most of the early-stage investment increase in Q2 could be attributed to a single deal: xAI鈥檚 $6 billion in May.

Still, there were some other jumbo-sized rounds in the mix. , a startup harnessing AI for drug discovery and development, launched in April with . , which makes metal-hydrogen batteries, secured $308 million in financing. And , focused on medicines in immunology and inflammation, landed in May.

Seed stage

Seed has been the most stable stage for overall venture investment in recent quarters, and Q2 was no exception.

Investors put $3.9 billion into reported seed, pre-seed and angel deals in the second quarter, up 8% from the prior quarter and 5% from the same period last year. For perspective, we charted the past five quarters below:

Although round counts declined slightly in Q2, we expect the number to rise a bit as deals at this stage are sometimes added to the database weeks or months after they close.

As usual, there were a few large seed rounds that helped boost the funding totals. By far the largest was a for , a household robot startup. , a developer of AI models for therapeutics, picked up , while , focused on AI-enabled 鈥渁gents鈥� for enterprise customers, landed .

Exits

While Q2 didn鈥檛 produce a lot of high-profile exits for venture-backed companies, there were a few large acquisitions. IPO activity, meanwhile, remained muted, although we saw some good-sized market debuts for biotech and technology companies.

M&A

On the software M&A front, the largest deal of the quarter was software investor 鈥檚 $3 billion purchase of auditing platform provider .

For biotech, the quarter鈥檚 biggest acquisition was 鈥檚 acquisition of , a developer of treatments for eye diseases, for $1.3 billion upfront and up to $1.7 billion in milestone-based payments.

Other sizable biotech acquisitions during the quarter included 鈥檚 of , 鈥檚 of , and 鈥� of .

Larger software deals included 鈥檚 of and 鈥檚 of .

IPOs

Although it wasn鈥檛 the most rollicking quarter for IPOs, we did see a few venture-backed companies make it to market.

One standout was data security firm , which went public on NYSE in April, at an initial valuation of $5.6 billion. Another was , a Google-backed startup applying AI to precision medicine, which raised $410 million in its June debut on Nasdaq.

Additionally, made a solid debut in June, with an initial valuation around $2.7 billion. The online comics publisher, which has its roots in South Korea, is headquartered in Los Angeles.

Big picture

Overall, the Q2 startup investment and exit tallies offer some fodder for both optimists and pessimists.

On the optimists鈥� side, we can point to rising investment totals, continued strength in AI startup funding, and a few good-sized exits. Pessimists, meanwhile, might highlight weaker funding for areas like enterprise software and consumer-focused startups, as well as a large backlog of mature, heavily-funded private companies that have yet to produce an exit.

Because VCs and entrepreneurs tend to be an optimistic bunch, my guess is going forward we鈥檒l hear more from the glass-half-full camp around rising investment and the incredible potential of AI. Nonetheless, it鈥檚 clear there are still many startups and industries that have not partaken in the bullish run.

Illustration:

Funding to companies in AI more than doubled quarter over quarter to $24 billion 鈥� representing 30% of all dollars invested, the largest quarter for AI funding in recent years. And there are signs that larger M&A deals increased in Q2, providing much-needed liquidity to venture capital markets.

附近上门 data shows we are eight to nine quarters into the current funding decline. While this past quarter was amongst the highest for funding since Q1 2023, it is not necessarily a signal of a venture market comeback. Since 2023, funding has fluctuated quarter by quarter based on an increase in large growth rounds to pre-IPO companies and to companies in the AI sector. This past quarter is no exception.

Table of Contents

• • AI boost
  • Half-year update
  • Late-stage funding up
  • Early-stage up
  • Seed stable
  • Uncertain markets
  • Methodology
  • Glossary of funding terms

AI boost

AI was the leading sector for the first time since the launch of 鈥檚 , based on an analysis of 附近上门 data. Q2鈥檚 total of $24 billion was the largest amount raised in a quarter in the AI sector in recent years, despite investor concerns about revenue and high valuations.

Five out of six billion-dollar funding rounds went to AI companies. 鈥檚 raised $6 billion, and AI infrastructure provider raised $1.1 billion. Automated driving company , data preparation company and AI biotech company each raised billion-dollar rounds. Outside of AI, cybersecurity company raised a billion-dollar round.

Healthcare and biotech was the second-largest sector, raising $17 billion. Hardware companies 鈥� in large part due to AI infrastructure and semiconductor fundings 鈥� raised $11 billion. Financial services companies, typically in the top two sectors in the peak market of 2021, raised $9.8 billion.

Half-year update

Despite the uptick in the last quarter, funding for the first half of this year did not increase. Global funding reached $147 billion in H1, marking a 5% decline year over year, down from the $154 billion invested in H1 2023. And funding was flat compared to the second half of 2023.

Late-stage funding up

Late-stage funding reached $36 billion, up from $33 billion in the second quarter of 2023. Large fundings went to AI foundation model and AI infrastructure companies, autonomous driving, electric vehicles, cybersecurity, drug development and quantum computing companies.

Early-stage up

Early-stage funding was up in Q2, in large part due to the funding to xAI. Outside of the xAI financing, funding was in line quarter over quarter and year over year. Large early-stage rounds also went to biotech, lending, AI and renewable energy companies.

Seed stable

Seed funding was the most robust through the downturn. It has remained stable over the last five quarters, with around $8 billion invested at seed per quarter. Seed has come down by around a third from the peak quarters, dropping far less in this slower funding environment than early and late-stage funding amounts. Through the downturn, based on an analysis of 附近上门 data, companies are staying at the seed stage for longer, while the bar to raise Series A funding has gone up.

Notable M&A

Notable large deals on the software M&A front this past quarter include security company 鈥檚 bid for identity management company for $1.5 billion. Intelligence platform has plans to acquire competitor for $930 million. And , a company that improves GPU performance, is to be acquired by for $700 million.

Uncertain markets

Despite the pickup in venture in Q2 2024 and increased funding to AI, the overall market outlook has not shifted. Concerns about revenue growth, a challenging environment for startups raising funding, a higher bar at each stage and a slower exit environment continue to impact venture capital allocation.

In the meantime, signs of a more active M&A market would address some of the uncertainty about venture returns.

Methodology

The data contained in this report comes directly from 附近上门, and is based on reported data. Data reported is as of July 7, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. 附近上门 converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to 附近上门 long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. 附近上门 also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the 鈥淪eries [Letter]鈥� naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a 鈥渧enture鈥� round. (So basically, any round from the previously defined stages.)

Illustration: