The first look at the dealmaking environment for venture capital in the second quarter of 2024 revealed continued struggle, the NVCA said.
The first look at the dealmaking environment for venture capital in the second quarter of 2024 revealed continued struggle, according to Pitchbook and the National Venture Capital Association.
The lead VC analyst Kyle Sanford and lead EMEA private capital analyst Nalin Patel offered their “first look” observations about the Venture Monitor report for Q2 2024.
They noted that on the global level, inflation, interest rates, and macro uncertainty have pulled down VC dealmaking.
“Though deal value has seen an uptick due to several large, outsized deals, the dealmaking environment overall is struggling along,” Sanford and Patel said. “The high number of VC-backed companies globally are under pressure from the lower available capital, and many companies are being forced back into the market to raise further private funds because exits cannot be achieved.”
Fundraising figures are particularly slow, pacing the year for the lowest total commitments since 2015. The slowdown is exacerbated by the high rate of recommitments to the strategy that global LPs realized over the past few years, as investors (particularly in 2021 and early 2022) came back raise a new fund at a much quicker pace. Now that distributions have slowed, many limited partners are facing the inability to reup commitments back of their unbalanced portfolios.
Missing from the global venture market is the middle and large-sized merger and acquisition (M&A) deals. Acquisition counts have remained relatively high, though a large majority of the deals have been small.
The market is fertile ground for tech roll-ups and discount bargains, but larger deals have been balked at due to the need for immediate impact on the acquirers bottom line, which many acquisitions are unable to provide.
