Finances & Fundraising
VC Market Update: Q1 2024

VC Market Update: Q1 2024

Written by 
Pilot Team
May 1, 2024
VC Market Update: Q1 2024

Fundraising is the #1 focus for many of our clients. Clients often ask us when to fundraise, how much to fundraise, the pros/cons of raising equity vs debt, etc.

As fractional CFOs, we help clients from pre-seed to Series B+/M&A navigate an incredibly challenging fundraising market. We included our top hits from our latest VC market update below, including analysis on VC activity, valuation and exit trends. 

Want to chat about your own fundraise? Book time with the CFO team here.


  • Deal activity in Q1 remained roughly flat compared to the prior quarter, but varied by segment.
    • Pre-seed and seed-stage saw notable declines while late-stage saw moderate increases, with early-stage somewhere in the middle.
  • Down rounds and pay-to-play provisions are becoming increasingly common, while liquidation preferences have not changed.
  • Exit activity from M&A is the slowest it has been in a decade and trending downwards, while a handful of successful IPOs trickle out (Reddit / Astera Labs).
  • VC fundraising is at its lowest levels since 2014 and continues to decline, while dry powder remains elevated.

VC Activity

Overall Activity

Deal activity was slightly down from the prior quarter but remained in line with last year’s Q3 low. Quarterly deal value remains at its lowest levels since 2018, and median deal sizes have remained roughly flat over recent quarters.

According to Cooley's quarterly Venture Financing Report, there was a sequential decrease in monthly deal count throughout Q1, suggesting a potential downward trend in market activity.

Source: Pitchbook / NVCA Venture Monitor Q1 2024; Q1 2024 Venture Financing Report - Cooley LLP

Pre-Seed & Seed Activity

The earliest stages of venture capital saw the steepest drop in activity of any category in Q1. This follows the consistent trend we have been seeing since the beginning of the VC downturn in 2022, where the later stages were the first to experience the downturn and have been the first to recover, with the earlier stages lagging by several quarters. 

Overall, pre-seed and seed deal value fell by 29% and 39% on a quarter-over-quarter and year-over-year basis respectively, hitting a low of $2.6 billion.

Source: Pitchbook / NVCA Venture Monitor Q1 2024

Early Stage Venture Activity

Early-stage activity (Series A and B financings) has appeared to stabilize, with modest gains from the prior quarter. Deal value in this space remains relatively flat on a year-over-year basis, but increased by 7% QoQ. Estimated deal count remained flat, implying slightly higher average deal sizes.

Trailing 12 months total deal value for early-stage VC is roughly in-line with 2018 levels, however when adjusted for inflation, it effectively represents a 20% reduction.

Source: Pitchbook / NVCA Venture Monitor Q1 2024; U.S. Bureau of Labor Statistics

Late Stage Venture Activity

Late-stage venture (Series C and D financings) experienced the greatest increase in deal activity, with total deal value rising to $19.1 billion, an almost 10% increase from the prior quarter. This upward trend in late-stage VC activity may signal a recovery for the overall VC market.

Since the onset of the VC market downturn in 2022, late-stage companies were the first to be impacted by market fluctuations, with the preceding stages following in sequential fashion. Should this recovery trend persist, we may see similar rebounds in the early-stage and seed-stage segments in upcoming quarters.

Source: Pitchbook / NVCA Venture Monitor Q1 2024

Venture Capital Demand/Supply Imbalance

The demand-to-supply ratio in venture capital remains high overall, with late-stage ventures feeling the most significant impact.

Late-stage venture capital still faces the brunt of the impact as investors retreat due to poor public market performance, liquidity concerns, valuation issues, and nontraditional investors' retrenchment, leading to a widening funding gap and challenges for maturing startups.

Source: Pitchbook / NVCA Venture Monitor Q1 2024
Note: “Early-Stage Venture” as includes Series A and Series B financings, “Late-Stage Venture” includes Series C and D financings, “Venture Growth” includes Series E and later financings


Private Market Valuations

Given the scarcity of publicly reported valuation data in private market deals, obtaining comprehensive and reliable market data is challenging. 

Cooley, a law firm specializing in venture capital financing, compensates for this gap by issuing a quarterly report derived from the transactions it facilitates for its clients, offering a valuable dataset for analysis. Trends based on Cooley’s report:

  • Early and mid stage financing saw increases in median pre-money valuations.
  • Series C, D and beyond saw declining pre-money valuations.
  • 32% of deals were down rounds, the highest since the report started in 2014.
  • 2.5% of deals involved a recapitalization, and 8% of deals included a pay-to-play provision1 (4th time since report began in 2014 that this exceeded 7%).
  • Despite these negative trends, 1x non-participating liquidation preferences are still the norm, at 94% of deals.

Source: Q1 2024 Venture Financing Report - Cooley LLP
1. Pay-to-play refers to a provision in a venture capital financing that requires existing investors to participate their pro-rata share in the round or face conversion into common shares at a ratio as much as 10:1, resulting in significant dilution to the non-participating shareholder.

Public Market Valuations

Median forward revenue multiples for public SaaS companies have recovered from the lows in November and have been hovering around 5.5x. 

Although the startup ecosystem is diverse, the SaaS industry serves as the best proxy in public markets for analyzing startup dynamics.

Source: Meritech Capital
Note: Market data as of 4/15/24


Total exit value rose nearly 81% to $18.4 billion in Q1, up from $10.4 billion in the prior quarter. While the exit value did represent a marked improvement from the previous quarter, it was heavily skewed by two large IPO exits – Reddit ($6.5bn) and Astera Labs ($5.0bn).

Exit activity from M&A continues to be very low, totaling just $6 billion in Q1 2024, lower than the quarterly average for 2023. 

The FTC continues its aggressive stance on M&A—particularly as it relates to Big Tech—and recently launched an investigation into specific investments by companies such as Alphabet, Amazon, and Microsoft in leading AI startups like OpenAI and Anthropic.


Venture capital fundraising continues to be very weak with a total $9.3 billion committed to 100 funds in the Q1. To put that into context, the quarterly average for 2023 was $21 billion, which itself was a 57% discount to 2022’s quarterly average of $47 billion. On a run-rate basis, Q1’s fundraising figures are the lowest since Pitchbook’s data began in 2014.

Despite lackluster fundraising activity, dry powder continues to grow to its highest levels on record totaling $311.6 billion. The historically low levels of new fundraising suggests that the existing dry powder may be deployed over a much longer period than in previous years.
Source: Pitchbook / NVCA Venture Monitor Q1 2024

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