"6 out of Top 10 VC Investments in Q3 Are AI"

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KPMG Publishes '2024 Q3 VC Investment Trend Report'

Global venture capital (VC) investment in the third quarter of this year fell to its lowest level in seven years due to ongoing geopolitical risks and uncertainties surrounding the U.S. presidential election. The number of large deals exceeding $1 billion also decreased.

According to the 'Venture Pulse Q3'24' report published on the 31st by global accounting and consulting firm KPMG, global VC investment declined from $95.5 billion in Q2 2024 to $70.1 billion in Q3 2024. The number of deals also dropped from 9,270 to 7,227 during the same period.

By region, VC investment in the Americas decreased from 4,104 deals ($58.6 billion) in Q2 2024 to 3,124 deals ($41.4 billion) in Q3 2024. Despite the overall contraction in VC investment, the U.S. attracted a significant portion with 2,794 deals ($37.5 billion), but the number of mega deals fell from six in the previous quarter to two.

Europe saw a sharp decline from $17.9 billion in Q2 2024 to $12.5 billion in Q3 2024, marking the lowest level since Q2 2020. Across Europe, there was notable interest in companies integrating AI with biotech, and Germany showed overall strength by securing the largest deal in Europe (Helsing).

VC investment in the Asia-Pacific region hit a seven-year low at $15.6 billion in Q3 2024. China accounted for $6.1 billion, attracting the largest VC investment in Asia, but this was the lowest in a decade.

Japan attracted $1.8 billion in VC investment, reaching its highest level in 12 quarters. The number of deals (356) also hit a 10-quarter high. Three deals in Asia-Pacific ranked among the top transactions: India's quick-commerce company Zepto, hotel booking startup OYO Rooms, and edutech firm Physics Wallah.

VC investment worldwide this quarter was heavily focused on AI. Six out of the top ten deals by size were concentrated in AI. Defense-tech companies utilizing AI technology in the defense industry received significant attention, including U.S. Anduril Industries with a $1.5 billion deal and Germany's Helsing with a $483 million deal.

Additionally, startups integrating AI across various industries attracted market interest, such as AI inference chip developer Groq with $640 million and AI-based immersive technology company Infinite Reality with $350 million. The report forecasts continued contraction in VC investment activity for the time being but expects sustained interest in AI and defense technology investments going forward.

Jung Do-young, partner at Samjong KPMG Startup Support Center, said, “VC investment and exits are expected to remain weak in Q4 this year, but if uncertainties related to the U.S. presidential election are resolved early next year and macroeconomic conditions improve, a market rebound is possible.” He added, “Due to population decline and aging, demand for healthcare services will increase, leading to continued investment in healthtech, robotics, and biotech sectors. Cybersecurity and alternative energy solutions are also promising.”

Jung also noted, “Regionally, India, where Hyundai Motor recently succeeded in an IPO, is highlighted for its growing domestic market and favorable funding environment for small and medium ventures. Japan continues to see VC investment centered on AI, deep tech, and biotech sectors, so attention to these regions is necessary.”

This content was produced with the assistance of AI translation services.