VC megadeals are booming — and AI is surprisingly not the highest class | TechCrunch

Ask any VC if we’re nonetheless in a enterprise capital bear market and that investor will virtually definitely let you know no, that funding continues to be flowing for good corporations.

That may sound like spin, as a result of anecdotes abound about how tough it nonetheless is for these elevating now. And for good purpose. Down rounds — that’s, elevating at a decrease valuation than a earlier spherical, which founders wish to keep away from until they don’t have any alternative — have been nonetheless at close to document highs by means of the primary half of 2024, based on Aumni’s Venture Beacon report. Round 39% of late-stage offers have been a down spherical, based on Aumni’s report. That covers Collection B and past, with the largest proportion of down rounds at Collection C and past.

Even Stripe – whose success nobody questions – hasn’t absolutely rebounded to its 2021 $95 billion valuation as of an enormous secondary transaction that befell in July. Though it did climb again to $70 billion by then.

However regardless of this sort of gloom, late 2024 stats are full of fine information, too. As an illustration, new data from Crunchbase exhibits a downright increase in mega offers – funding rounds of $100 million or extra.

Crunchbase tracked practically 240 mega rounds for U.S.-based startups to date this 12 months, which is already greater than the 210 raised all of final 12 months. 

Much more fascinating is that Crunchbase’s high class for these offers was not AI. Biotech and well being care startups accounted for 87 mega offers, in comparison with 26 for second-place class AI.

A few of these rounds are admittedly crossover: corporations engaged on AI for well being care. As an illustration, Crunchbase calls out AI drug discovery firm Xaira Therapeutics as one of many notable well being tech megadeals. Xaira launched in April with a large $1 billion spherical led by ARCH Enterprise Companions and Foresite Labs (each identified for biotech), however with traditional Silicon Valley VCs within the spherical, too, like NEA, Sequoia Capital, Lightspeed Enterprise Companions, SV Angel and others. 

We’d arguably name Xaira an AI firm, and included it in our ongoing listing monitoring AI startup megadeals. 

However there have been additionally offers like Superluminal Medicine’s $120M Series A, led by Eli Lilly. Whereas it’s also utilizing machine studying to hurry drug creation, its focus is discovering drugs for sure small molecule receptors on cell membranes. That’s a scorching space in biotech proper now – no AI-washing required. The deal was backed by traditional tech traders Perception Companions and Gaingels, in addition to NVentures (NVIDIA’s enterprise capital arm), which appears to be all over the place as of late.

Different biotech Collection A and B megadeals embrace the $120 million collection B closed by Terray Therapeutics, which can also be engaged on small molecule medicine; and the $100 million Collection A Judo Bio landed to deal with kidney medicine. A brand new biotech mega deal appears to be introduced each week.

Past well being tech and AI, one other sector nabbing mega rounds is cybersecurity, with 16 such offers to date this 12 months. Examples embrace e-mail safety startup Kiteworks elevating $456 million, knowledge safety startup Cyera elevating $300 million, and cloud safety startup Wiz elevating a whopping $1 billion.

There are additionally just a few different items signal for founders at earlier phases. Pre-money valuations improved barely for seed and Collection A offers within the first half of the 12 months, Aumni discovered. 

2024 dealmaking additionally seems to be on about the identical tempo as 2023, based on the Q3 PitchBook-NVCA Venture Monitor. In 2023 it clocked in at just under 16,000 deals, which was only a bit increased than the common annual exercise earlier than the pandemic and ZIRP-fueled frenzy of 2020-21.

For these all for studying extra, TechCrunch Disrupt 2024 will host a session on the Builders Stage titled “What You Must Elevate a Collection A As we speak” and one other on “How one can Elevate in 2025 if You’ve Taken a Flat, Down, or Extension Spherical.”