In Q4 2024, the venture capital (VC) market was showing signs of recovery, marking a two-year high in quarterly funding. According to the CB Insights State of Venture 2024 Report, Q4 saw a major funding resurgence, largely driven by the continued AI boom. Here’s a breakdown of the most important trends shaping the VC landscape. In addition, our General Partner, Yasushi Komori, provides expert opinion on what we foresee in 2025.
A Strong Rebound in Funding
After a challenging 2023 and early 2024, global venture funding saw a significant rebound in Q4 2024, reaching $86.2 billion, a 53% increase quarter-over-quarter (QoQ). This marks the highest funding level since early 2022 and suggests renewed investor confidence.
This surge signals that while overall deal volume remains lower than pre-2022 levels, investors are doubling down on high-growth opportunities, particularly in AI and deep tech.
AI’s Market Dominance Reaches New Heights
AI continues to reshape the VC ecosystem, capturing 37% of total venture funding and 17% of all equity deals in 2024—both record highs.
The four largest VC deals of 2024 were AI-driven, including:
The Databricks office building |PHOTO CREDIT: The Information
Early-stage AI investments surged, with nearly 74% of AI deals occurring at the seed, angel, or Series A stage. AI infrastructure players dominated late-stage fundraising, reinforcing the sector’s central role in shaping the next wave of technology innovation.
With AI adoption accelerating across industries, the arms race for market leadership and technological breakthroughs is expected to continue into 2025.
Early-Stage Valuations Hit Record Levels
Investors remain bullish on early-stage startups, especially in AI and automation.
Unicorn Creation Slows but Quality Remains High
While Q4 2024 saw only 11 new unicorns (private companies valued at $1B+), the quality of these new entrants remains strong.
Top new unicorns included:
This moderation in unicorn creation aligns with a more disciplined investment environment, where companies must demonstrate strong fundamentals before securing billion-dollar valuations.
IPO Market Remains Challenging
Public market conditions have delayed IPO plans for many venture-backed startups. The median time from first funding to IPO extended to 7.5 years, up from 5.5 years in 2022. Rather than going public, many late-stage companies raised additional private funding or explored secondary share sales to create liquidity for investors and employees.
Notable Q4 2024 IPOs included:
VCs remain cautious about public exits, preferring longer private-market growth cycles until macroeconomic conditions stabilize.
Horizon Robotics listing ceremony at the Hong Kong Stock Exchange | Photo Credit: PR Newswire
M&A Activity Surges as Investors Seek Liquidity
Mergers and acquisitions (M&A) emerged as the dominant exit strategy in Q4 2024, accounting for 2,046 deals.
Top M&A deals of Q4 2024 included:
With public exits still uncertain, corporations and private equity firms are actively acquiring high-potential startups, offering VCs much-needed liquidity.
Expert Opinion by Yasushi Komori
The exit and fundraising environments remain challenging, and these headwinds are expected to persist into 2025. However, there are early signs of stabilization following the interest rate cuts that began in September 2024. Encouragingly, we have observed subtle improvements in the fundraising landscape, with positive momentum building across the GFR Fund portfolio from late 2024 into the new year. Wally, one of our portfolio companies, which closed a strong Series A round at the end of last year, also reinforced this momentum.
As of February 2025, several high-profile growth stocks—such as Reddit, Palantir, and Applovin—have been performing well, suggesting renewed investor confidence in the public markets. If this trend continues, we may see strong IPO activity later in the year, providing much-needed liquidity for venture-backed companies.
That said, macroeconomic uncertainties persist. Inflation remains a concern, and with a new administration now in place, potential policy shifts could introduce new risks. It will be crucial to monitor market conditions carefully and adapt accordingly.
At GFR Fund, our focus remains on pre-seed and seed-stage investments, where we see the most opportunity for long-term value creation. However, discipline in valuations will be key—we must ensure that investments are aligned with realistic market multiples to navigate this evolving landscape effectively.
There is no guarantee that the portfolio companies mentioned in this blog will be profitable or will remain in the fund. Portfolio companies are shown for illustrative purposes only. Past performance is no guarantee of future results.
Certain information contained herein has been obtained from published sources and/or prepared by third parties.
If you're an investor or LP looking for partnership opportunities, reach out to us at hello@gfrfund.com. For startups, please pitch to us by filling out this form. We'd love to hear from you!