US Series A And B Funding Picked Up in H1. What Does That Mean For Funding In 2024?

Editors note: Next up we will look at the investors that have increased their pace at this stage in the first half of 2024.

Although Series A and B funding for U.S.-based companies picked up in H1 2024 — up 34% year over year — the uptick may be deceiving.

While total funding reached $31.5 billion — the highest amount invested at this stage in two years — that increase was concentrated in larger fundings and in two leading sectors — healthcare/biotech and AI.

That includes a $6 billion Series B to xAI, which accounts for much of the increase. Still, if we remove that funding, H1 2024 is still above the half-year funding amounts in 2023.

Bottleneck at Series A

Since the second half of 2022, we found a Series A bottleneck based on an analysis of Crunchbase data. As the market tightened, seed-stage companies faced a more challenging environment in which to raise a Series A round. While all companies face this crunch, seed represents the largest absolute number of companies funded, as well as the stage with the least funding and lower revenues to manage through a tightened funding environment.

The recent uptick in Series A and Series B funding does not address that bottleneck.

Large rounds boost early stage

The increase at Series A and Series B fundings in the first half of 2024 was concentrated in larger funding at these stages. We looked at fundings by half-year both below and above the $50 million mark since 2018.

Large Series A rounds picked up in 2021 — the peak market. Those large rounds slowed every half year since, but increased in 2024.

Close to two-thirds of these large Series A companies in H1 2024 are in healthcare/biotech. The runner-up industry for large Series A rounds is artificial intelligence. Other sectors with large fundings in the low- to mid-single digits include Web3, energy and hardware.

Series B rounds show a similar trajectory. Around the market peak, larger rounds of $50 million and above increased and slowed since the second half of 2022. Recently, they’ve begun to pick up.

Alongside the xAI megaround, the pick-up this year is led by healthcare/biotech as the leading industry followed by AI. Hardware, including semiconductor and robotics, is the third-largest sector for large Series B rounds.

Concentrated bets

The increase in Series A and B fundings in H1 were concentrated in larger fundings and in two leading sectors; healthcare/biotech and AI.

Other sectors got short shrift.

There is a big gap between these two leading sectors and others. Financial services, e-commerce and shopping, and transportation sector amounts, for instance, were significantly down.

Despite the fact that funding was concentrated, there was a noticeable increase in large Series A round counts. That could be seen as a sign of optimism.

Related Crunchbase Pro list:

• US Series A And B Fundings In 2024

Further reading:

• A Robust Seed Market Creates Its Own Dilemmas In A Slower Funding Market

Illustration: Dom Guzman