The Q2 State Of Startups In 7 Charts

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Two years into a venture funding slowdown, a lift from mega-rounds and AI funding signaled a stronger quarter in Q2.

There are also signs that active venture investors, who backed off from the peak volume of 2021, are picking up the pace a little.

However, despite the glimmer of an uptick, the overall funding outlook has not changed, as founders still face a high bar to raise funding at each stage.

Global funding peaked in the past year

Global funding was up in Q2, reaching $79 billion, a five-quarter high. This uptick was driven in large part by mega rounds of $100 million and above — a demonstration of confidence in growth-oriented late-stage companies — alongside a competitive AI investment runup.

AI boosted

While a growing chorus of investors raised concerns about AI-generated revenue compared to massive capital expenditures, AI funding grew this past quarter. Funding to the AI sector doubled to $24 billion, the highest amount seen in the past 18 months, led by billion-dollar fundings in xAI, CoreWeave, Wayve, Scale AI and Xaira Therapeutics.

Khosla headlines

Some of the most high-profile investors picked up the pace year over year for leading post seed rounds. Khosla Ventures, Accel and Andreessen Horowitz led a higher count of post seed rounds. Growth and private equity investors are noticeably absent and counts are way down from 2022.

North America pops

U.S. and Canadian startups had the highest quarter for funding since Q1 of last year. Funding reached $45.3 billion, up more than a third year over year, based on an analysis of Crunchbase data. AI funding this past quarter was up, in line with global trends, more than doubling quarter over quarter and year over year to $16.8 billion.

Asia limped

Funding to Asia saw the worst quarter since 2015. Across the region, startups raised $14.6 billion, a 32% decline from a year ago.

The percentage of funding to AI-related startups was lower than that in other regions, reaching $2.5 billion — less than 20% of overall funding this past quarter — and far lower than the $16.8 billion raised by North American startups.

Late-stage boost in Europe

Europe beat out Asia for quarterly funding for the first time in a decade based on an analysis of Crunchbase data. Funding to European startups reached $16 billion, with a bump in late-stage funding alongside large rounds to companies in the AI sector.

LatAm fluctuates

Funding to South and Central American startups is well below the peak quarter of Q2 2021. Funding reached $791 million across South and Central America, with Brazil- and Mexico-based startups garnering the greatest share of funding, and fintech the leading sector in the region.

– Chris Metinko and Joanna Glasner contributed to this report.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of July 7, 2024.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

We have made a change to how we include corporate funding rounds in our reporting as of January 2023. Corporate rounds are only included if a company has raised an equity funding at seed through a venture series funding round.

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early-stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late-stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)