Startup exits have been on the decline since their heyday in 2021, but a recent report signals an upswing may be imminent.
According to a recent report by Deloitte and PitchBook, shows that the value of late-stage startup exits in the first half of 2024 has already surpassed those in the full year of 2023. The Bay Area saw $32.3 billion in deals across 131 exits, while the full year of 2023 only saw $28.1 billion, but across 273 exits.
Exits are defined as IPOs, acquisitions, buyouts or SPAC mergers — the time where investors in startups finally get a payout.
The strong performance this year was driven by high value exits in the SaaS, AI and life sciences industries. AI exits this year totaled $5.2 billion, compared to $2.2 billion last year, while life sciences exits surged to $7.7 billion this year from $2.4 billion from the full year of 2023.
"The Bay Area benefited disproportionately compared to the other areas of the country, mainly due the AI talent being smack in the middle of the Bay Area" said Heather Gates, audit & assurance private growth leader at Deloitte & Touche LLP and the co-author of the report. "But overall, the U.S. is set to do better this year, thank goodness, because 2023 was an abysmal year."
Despite reversing a downward trend, 2024's exit value pales in comparison to the peak in 2021, where exits valued at a whopping $518.4 billion.
"When you have that dynamic of cleaning out what was probably the overvalued hyperactivity of 21-22, then you hit the restart button," Gates said. "This is the beginning of coming out of a trough and I think in terms of exits, the biggest kind of deterrent to public offering exits is volatility in the market and the biggest source of volatility right now is the upcoming election."
