Pitchbook just released its Q4 2024 Venture Monitor Report. It’s a good read and very comprehensive on the state of venture investing. The big takeaway for us is that venture deal activity is healthy, if not strong. The two charts below really stand out to us.
The report states “The pace of dealmaking was remarkably slower in 2024 compared with the flurry of oversubscribed rounds from the pandemic years,” however in our view the right period to compare any year to is 2019, which was venture’s last ‘normal year’.
Why? 2020 and 2021 were obviously positively impacted by the pandemic. We do not see venture valuations or deal making ever returning to those levels absent work-from-home mandates or a similar event which elevates software to mission critical levels, and near zero interest rates. Those years should therefore be ignored as they’re anomalies. 2022 and 2023 marked what I would view as periods of recession for software, whereby valuations really collapsed as did deal making due to customers re-evaluating their software spend. As a result, those are not ‘normal’ years.
That leaves 2019 alone as the last year in which a comparison is valid. We’d make two points about the data: i) prior to 2020, 2019 was the best year since the dot com era for both valuations and deal making within venture. It took covid to make 2019 seem pedestrian; and ii) 2024 deal making and volumes are in line with or better than those wonderful years. Overall, we believe venture deal volumes and counts are in a great place.
Q4 also may be the start of a strong 2025. According to Pitchbook, “Deal activity increased at nearly all stages, with pre-seed/seed and earlystage deals notching 2024 highs and late-stage deals seeing a slight bounce back after two consecutive quarters of declines. The increases continue to be driven by companies finally coming back to market to raise new financings.”
In conclusion, the venture market is in a good place in our view. We’re not going back to 2021/2020, we’re not in a software recession like we were in 2022 and 2023, and we’re at or above 2019 levels which were a long-standing record prior to covid.
Thank you for your readership. See more blogs and SaaS data at blossomstreetventures.com. Email the author at sammy@blossomstreetventures.com.
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