Venture capital activity across the U.S. is seeing an uptick in total dollars invested in companies but the money invested is going to fewer businesses than it did this time last year, according to recent PitchBook data.
In the second quarter of 2024, U.S. companies raised a collective $55.6 billion from venture capital firms across 3,108 deals. This is an uptick in deal value (by $20.2 billion) but a decline in the number of deals (by 562) quarter over quarter, according to the Q2 2024 PitchBook NVCA Venture Monitor report.
Colorado's VC scene, however, has remained steady year over year, according to PitchBook data
Colorado companies collectively raised just over $1 billion in Q2 across 96 deals, down slightly from the nearly $1.03 billion raised in Q2 2023. The second quarter of 2023 saw 97 deals.
Quarter over quarter, both deal count and capital invested in Colorado-based companies are on the decline, data shows. The most recent quarter is significantly down from Q2 2022, in which Colorado companies raised nearly $2.56 billion across 140 deals.
While deals are still getting done, the lack of companies going public and the exit slowdown are putting pressure on companies and investors, experts say.
"Lengthening exit slowdown is pressuring companies back into a market that is less forgiving than that which companies are used to," Kyle Stanford, lead VC analyst at PitchBook, said in a statement. "Relatively lower deal value growth (QoQ growth this quarter was driven by [New Jersey-based] CoreWeave and [California-based] xAI deals), highlights the lesser capital availability in the market."
Locally, only one company has gone public this year.
Ibotta (NYSE: IBTA), a Denver-based tech company, went public in April. Ibotta is the first local company to go public since 2021, when special purpose acquisition company mergers were more popular.
Not all is doom and gloom, though. The five Colorado businesses that raised the most private equity and venture and private capital in June pulled in a collective $9.376 billion — more than local companies raised during the first half of 2023.
One local VC partner said the end of June is a lot like the end of November.
"In November, if you don't have a term sheet signed by Thanksgiving, you're not going to get one before the end of the year," Rich Maloy, managing partner at Denver-based SpringTime Ventures, said on LinkedIn. "Likewise in the summer, if you don't have a term sheet signed before June is out, you're not going to get one between now and August."
"I'd argue that between now and August your time is best spent on the business, not fundraising," he added. "Keep those investors updated, then come back to [the] market in August."
As the funding scene continues to fluctuate nationally and locally, experts say they continue to see an increase in artificial intelligence companies receiving funding.
In Colorado, MagicSchool AI secured a $17.9 million equity investment to continue developing AI tools for K-12 educators and students. Denver-based VC firm Blackhorn Ventures also recently raised a $150 million fund to invest in businesses at the intersection of AI, clean energy and manufacturing.
"The market is seeing a lot of hype in AI," Nizar Tarhuni, vice president of institutional research and editorial at PitchBook, said in a statement. "Some would argue this is a bright spot for dealmaking, but we're seeing glimpses of low-diligence deals getting done that might pose risks to fund returns down the road. Given the factors at play, this market will likely continue to be challenging for VC fundraising, and, in turn, startups looking to raise capital."
