Global Funding Slowed In Q3, Even As AI Continued To Lead

Global venture funding in the third quarter of 2024 reached $66.5 billion, Crunchbase data shows. That’s down 16% quarter over quarter and 15% year over year from the $78 billion invested in Q3 2023.

We are now nine or 10 quarters into the current startup funding decline. This past quarter was the second below the $70 billion mark since the start of the current venture funding downturn, according to Crunchbase data. Outside of Q4 2023 and this past quarter, one would need to go back to 2017 to find another quarter below $70 billion.

But Q3’s numbers don’t necessarily signal a further pullback in venture funding moving forward, as we’ve seen large fundings fluctuate quarter over quarter this year and last, skewing overall numbers.

Large, late-stage rounds lead drop
AI led
Late-stage down YoY
Early-stage flat YoY
Seed down
Through Q3
Methodology
Glossary of funding terms
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Related reading

Large, late-stage rounds lead drop

In Q3, the steepest decline year over year was seen in late-stage funding and was most evident in the largest rounds, those $500 million and above.

The concentration of venture dollars that went to the largest rounds — those of $100 million or above — was also slightly lower in Q3, at about 46%, compared to about 50% in Q2 and the third quarter of last year.

AI led

AI was the top sector by dollars invested in the third quarter, with funding to artificial intelligence startups reaching close to $19 billion, or 28% of all venture dollars, Crunchbase data shows.

Funding to companies in AI has grown in 2024 by both absolute dollars invested and proportion. Last quarter was the second-largest quarter for AI funding since the mainstream launch of OpenAI’s ChatGPT in November 2022, behind only Q2 2024.

AI surpassed healthcare and biotech, the second-largest sector, which raised more than $15 billion.

Hardware, the third-largest sector, raised more than $13 billion. Financial services companies, meanwhile, raised close to $8 billion.

The largest funding deals in Q3 were all over $500 million:

Waymo, an autonomous driving service and Alphabet subsidiary, raised $5 billion from its parent company;
Defense tech startup Anduril Industries raised $1.5 billion in a round led by Founders Fund and Sands Capital Ventures;
Safe Superintelligence, an AI research lab founded by OpenAI founder Ilya Sutskever, raised $1 billion. The lead investor was not disclosed but Andreessen Horowitz, Sequoia Capital, NFDG Ventures and DST Global participated in the funding;
Legaltech startup Clio raised $900 million led by New Enterprise Associates; and
AI chip company Groq raised $640 million led by BlackRock.

Late-stage down YoY

Late-stage funding reached $34.7 billion, flat quarter over quarter and down from $46 billion in the third quarter of 2023, Crunchbase data shows. The biggest change in Q3 from a year earlier was a decrease in the amount invested in deals above $500 million.

Last quarter, large fundings went to autonomous driving, defense tech, professional services, semiconductor and AI model companies.

Early-stage flat YoY

Early-stage funding reached $24.7 billion, down quarter over quarter in large part due to the $6 billion Series B funding to Elon Musk’s OpenAI competitor xAI in the second quarter, which skewed those numbers upward. (On Wednesday, two days into Q4, OpenAI officially announced its own $6.6 billion raise that values it at more than $150 billion.)

Year over year, early-stage funding was flat. By far, large early-stage rounds were dominated by AI and biotech.

Seed down

Seed funding reached $7 billion in Q3, down quarter over quarter and year over year, Crunchbase data shows. (Though it’s worth noting, there is typically a gap as many seed fundings are often added to the Crunchbase dataset after the close of a quarter.)

The majority of seed funding — around $6.8 billion — was invested in fundings of $1 million and above, across more than 1,500 companies globally.

Through Q3

Year-to-date, venture funding is down around 7% year over year.

Based on an analysis of global funding through the third quarter compared to the same timeframe in 2023, seed funding year to date appears flat, (but is likely to show an uptick as seed rounds are added after the quarter-end), early-stage funding is trending up by around 10%, and late-stage funding is down around 20%.

While venture seems to be in a holding pattern year over year, the underlying dynamics of the industry are shifting as fundraising for venture funds slowed down in 2024. With fewer funds, the impact will be seen at the earliest stages of funding moving forward.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data is as of Oct 2, 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. Crunchbase 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 Crunchbase 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. Crunchbase 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. Crunchbase 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 “Series [Letter]” 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 “venture” round. (So basically, any round from the previously defined stages.)