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In the first quarter, U.S. VC investment deal value reached $36.6 billion across 2,882 deals, a decline from the previous year, according to a report.
The first quarter of 2024 demonstrated a more subdued VC investment landscape in the U.S. with fewer large deals compared to the previous quarter. However, overall deal count remained relatively high, as reported by Pitchbook and the National Venture Capital Association.
While the quarterly deal value was the lowest since 2017, the absence of significant outlier deals is noteworthy, signaling a cautious investment environment where capital availability is limited.
On a positive note, valuation data indicated a slight increase at the median across various stages, attributed to public market performance, multiple expansion, and the ability of strong companies to raise capital despite market challenges.
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Investors are exercising caution due to ongoing uncertainties, with inflationary pressures delaying expected interest rate cuts and the specter of a looming recession. The NVCA anticipates no significant uptick in deal activity in the near future.
U.S. exits
The Reddit and Astera Labs IPOs were standout exits of the quarter, collectively contributing a significant portion to the total exit value generated by March.
While the IPOs performed well initially, there remains uncertainty surrounding their future performance, especially in a market dominated by mega-cap tech stocks, where investor appetite for high-risk, loss-making companies is untested.
M&A activity during the quarter was challenging, especially for large companies, with most transactions being relatively small in size, according to the report.
