So EY put together a good, succinct report on the VC markets today, combining their data with Crunchbase data to answer a seemingly basic question in venture capital today:
Just what’s going on in venture fundraising today?
On the one hand, Good Times are clearly back. VCs are investing fast and furious into AI, and mega AI growth rounds for OpenAi, Anthropic, Databricks etc. are attracting massive amounts of capital — fast.
And yet many founders feel like it’s as hard as ever to raise venture capital.
It turns out both are right.
Let’s take a look at at 3 charts that explain it
#1. Venture Dollars Are Up, But Deals Are Down.
You can see from the chart below that the dollars into venture rebounded, big time, at the end of 2024. Not back to 2021 levels, but far stronger than the past 24 months. You’ve seen it on TechCrunch in the media, and if you’re in the SF Bay Area, you’ve felt it. This velocity of capital into start-ups and scale-ups.
But it’s very narrowly focused into growth AI rounds. So as you can see below, the overall number of deals was down in 2024. Down to the lowest point since 2012. That’s important. And down from 2023 and 2022. Down.
Remember when 3x, 3x, 2x, 2x, 2x was the gold standard for annual growth in SaaS companies?
That was cute.
— Eric Vishria (@ericvishria) January 31, 2025
#2. Mega AI Rounds Are Driving All The Growth in VC — Back to Late 2021/Early 2022 Levels
This massive rounds into AI companies are accounting for all the growth in venture investing. Mega $100m+ rounds have roared back, mainly for AI companies. That’s where all the venture dollars are. Not in seed, Series A, etc.:
#3. 44% of All VC Dollars Going into AI — And That’s Going Up
A lot of founders today are asking: “If I’m not a truly native AI start-up, how hard is it to raise VC capital?” Look, it’s hard. As the chart below shows. If you are growing at true outlier rates, you’ll still get funded. But otherwise, there isn’t much VC appetite for any non-AI investments not clearly on the IPO path. The chart below illustrates things. It is easier today for hot AI start-ups that are scaling. For the rest? Not so much.
So it’s a tale of Two and a Half Worlds. Growth AI investments are consuming a huge amount of the VC capital being deployed. But if you’re outside of that? Deals are actually down.
It’s an AI gold rush in venture. In 2021, it was a SaaS B2B gold rush. It looks similar, the headlines, and the players. But the game has changed.
The CEO’s of of the fastest growing startups are doing the following
1. 100% in office
2. Very very lean headcount
3. Mostly homegrown exec teams
4. Shooting for $1trillion. Unicorns are dead.
5. 80+ hour weeks— Brian Halligan (@bhalligan) January 24, 2025
Full EY report here:
