2024 Venture Capital Investment Trends and Impacts Report

The venture capital (VC) landscape in 2024 reflects a dynamic shift across deal stages, industries, and geographic distribution. Despite some lingering challenges from macroeconomic uncertainties, the industry demonstrated resilience. The caveat is that most improvements were primarily driven by mega-investments in artificial intelligence (AI), which captured 37% of all funding. Almost every other sector saw a decline or stagnation.

Looking to 2025, analysts project reasons to believe we will see momentum in the venture environment. Demand for capital will likely continue to outpace supply as AI-enabled startups launch and scale quickly. After the challenges of the past few years, the venture environment has been honed, which is expected to continue to improve the quality and resilience of companies, portfolios, and funds. Analysts expect most of the ‘winners’ will be AI-enabled startups with solid business fundamentals.

Through 2024, investment strategies evolved in interesting ways. The IPO environment began to thaw, but the companies going public are much older, larger, and more expensive – making them unattainable for many investors. In the private market, however, innovative asset classes have opened access to more individual investors, influencing how wealth advisors diversify portfolios beyond the traditional 60/40 model.

After five years defined by volatility, 2024 was a turning point. 2025 shows very real potential for AI and AI-enabled companies, a widening selection of alternatives, and new investment opportunities in emerging categories.

The U.S. deal environment is increasingly selective.

A large amount of dry powder helped to stabilize dealmaking in 2024, mainly at the seed and early-stage deal stages. [Pitchbook 2025 US Venture Capital Outlook] Overall deal activity in the U.S. is generally robust but shows signs of consolidation, particularly around AI. Deal count dropped as annual deal value increased throughout the year – particularly in Q4, signaling the potential for larger but fewer deals in 2025. Proven traction, market potential, and AI business fundamentals will remain priorities for capturing investment.

For investors, the environment remains opportunistic as the demand for capital continues to outpace supply. The demand-supply ratio peaked at 3.5x in 2023 (up dramatically from the 1.3x average between 2016 and 2020). Improving venture conditions in 2024 point to an expectation that the demand-supply ratios in 2025 will come down but continue to trend above the 2016-2020 averages.

Despite the rise in capital deployed and deal counts, venture capital fundraising in the U.S. continued its decline in 2024. The number of funds also declined. The contraction is attributable to a few factors, including some funds’ inability to raise capital. But it also reinforces a positive consolidation trend as capital deployment continues to be more selective and more priority is given to high-potential companies that can prove strong business fundamentals.

For investors, the selective fundraising environment emphasizes the importance of evaluating a fund’s track record. For founders seeking capital in 2025, preparing for more stringent due diligence will be vital. Startups must show metrics to prove strong business processes, along with defensibility and differentiation in a crowded market. Moreover, they should show they are aligning business milestones with growing AI adoption and creating efficiencies through AI applications.

AI dominated VC activity and capital globally.

In 2024, in the U.S., AI-related ventures accounted for 46.4% of total VC deal value and 28.9% of deal count. [2025 pitchbook-NVCA Venture Monitor First Look] Globally, those figures were slightly lower – with AI capturing 37% of venture funding and 17% of deals. [CBI State of Venture Global 2024 Recap] Total annual AI investments in the U.S. reached $97B across nearly 4,000 deals. Deal activity peaked in Q4 2024 with $46.2B invested across nearly 1,200 deals. Nationally and globally, the activity represented all-time highs.

The top deals went to early-stage AI infrastructure companies, indicating that 2024 was an important year for continuing to lay the groundwork for technologies that likely will transform every sector in the coming years. The global median early-stage deal valuation reached a record $25M, signaling investors’ excitement about the possibility of startups accelerating and enhancing value creation by using AI to build products with less capital in less time. [CBI State of Venture Global 2024 Recap] It follows that 28% of wealth advisors plan to prioritize AI as the top investment sector. [CAIS-Mercer Alternative Investment Survey] The robust, sustained capital activity and investment recommendations from a growing number of wealth advisors are signs of AI infrastructure momentum that is unlikely to slow in 2025.

More IPOs, but most investors can’t afford to participate.

Venture portfolios are a source of massive economic potential – the 40% of U.S. unicorns that have been growing inside private market portfolios over the past decade constitute over $1T in potential value, and the IPO environment is showing signs of thawing. [pitch Book 2025 US Venture Capital Outlook] However, this scenario poses a challenge.

In 2024, the average age of a VC-backed company undergoing an IPO rose to 7 years and 6 months (globally) – up from 5 years and 5 months in 2022 and 6 years and 5 months in 2022. [CBI State of Venture Global 2024 Recap] In the U.S., that maturity is even more pronounced. The median age of companies that raised a Series D+ round in 2024 reached 9.7 years old – a near-decade high.

The rising maturity and decline in the number of companies undergoing IPOs has made the public market more inaccessible to many individual investors. More companies are building most of their value in the private market, many within venture and private credit portfolios. In 2024, those factors became even more important for individual investors and advisors, further fueling the momentum toward integrating private market funds into investment portfolios.

Portfolio composition continued its shift toward alternatives.

In 2024, the traditional 60/40 (stock/bond) portfolio balance continued to evolve toward a 50/30/20 (stock/bond/alternatives) mix as 92% of wealth advisors integrated alternatives into client investment portfolios. Most of these advisors (76%) allocated more than 5% to alternatives in their client portfolios – half of those advisors allocated more than 10%, and about one in 10 allocated more than 25%. The percentage allocation aligns with the investor profiles – clients with higher accreditation levels (i.e., qualified clients and qualified purchasers) tended to invest a higher percentage of their portfolios in alternatives.

For many investors, access and qualification have been hurdles to integrating alternatives. As more investors have sought to bypass these barriers, Evergreen fund adoption grew faster than almost any other type of alternative. [CAIS-Mercer Alternative Investment Survey] These vehicles are open to accredited investors and offer lower minimums and more flexible investment schedules, making them a pathway into alternatives for individual investors who are otherwise unable to access the private markets.

Coming out of 2024, analysts are debating and waiting to see whether we are moving into a healthier venture environment or if improvements were anomalies brought on by AI. Generally, there is an expectation that 2025 fundraising activity should surpass 2024 levels. More IPOs could boost exit values and increase distributions and liquidity for investors. Late 2024 rate cuts, steady 2.5% GDP growth, relatively low unemployment levels, and healthy corporate earnings could also contribute to a general sense of economic optimism that could improve consumer confidence and investment activity.

“The last few years of pain for VC has likely helped flush the system of tourists for the moment, as well as the investors that were into VC because it was the ‘it’ thing to do.” (PitchBook)

There is every reason for well-informed, well-prepared fund managers and startups to go into 2025 with measured optimism, if for no other reason than that the challenges of the past few years have honed the private market and venture-backed startups to support those that have proven their capacity for resilience.

Methodology & Bibliography

This report is compiled from FY 2024 and 2025 projection reports from PitchBook, NVCA, CB Insights, and CAIS. Some discrepancy in deal counts and value data exists between analysts. We have provided a recap of data from PitchBook and NVCA.

Bibliography

• PitchBook 2025 US Venture Capital Outlook
• 2025 PitchBook-NVCA Venture Monitor First Look
• CAIS-Mercer Alternative Investment Survey
• CBI State of Venture Global 2024 Recap

‍

📧 Subscribe to the BIP Ventures LinkedIn Newsletter for monthly content and updates.