According to a Global state of funding report by international tech startup funding analytics firm, CB Insights, the global tech ecosystem experienced a sharp decline in startup funding during the third quarter (Q3) of 2024.
A total of $54.7 billion was raised between July and September which represented a steep decline from the $68.1 billion raised by startups in the preceding quarter (Q2, 2024), representing a significant 19.7% decline. Additionally, it marked an 11.8% drop from the $62 billion raised in the first quarter (Q1) of the same year. The Q3 figures are the lowest recorded since 2020, falling below the previous low of $54.9 billion in the fourth quarter of 2023.
Decline in Deals And Investment Activity
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The report also reveals a sharp decline in the number of funding deals. Only 6,056 deals were recorded during the quarter, down from 6,736 in Q2 2024 and 7,209 in the first quarter. This marks the lowest deal count since 2020, well below the 7,201 deals recorded in Q4 2023, which had previously been the second-lowest.
In terms of funding raised in regions, the U.S. led the funding round raised in Q3 2024, while Africa lagged as the region that attracted the least funding. Startups in the United States accounted for the largest share of global startup funding, securing $29.8 billion, or 55.1 percent of the total raised in Q3 2024. Europe followed as the second highest, with $11 billion, raised, representing 20.1% of the total, while Asia attracted $10,5 billion, accounting for 19.2%.
Latin America raised approximately $800 million, representing 1.46% of the global total, while Oceania (Australia and New Zealand) secured $500 million, representing 0.9 percent of the total raised. African startups raised only $300 million, a mere 0.54 percent of the total, while other regions attracted $94 million in funding.
Meanwhile, despite the overall decline in funding and deal volume, the quarter saw some positive trends in deal sizes. There were 98 deals worth $100 million or more in Q3 2024, an improvement over the 85 such deals recorded in Q4 2023. Additionally, these large deals attracted a combined $21.5 billion, surpassing the $18.9 billion raised through similar-sized deals in the last quarter of 2023.
With the year almost over, 2024 is on track to be the slowest funding year since 2020 With a total of $184.8 billion raised so far in 2024. This is $76.6 billion short of the total $261.4 billion raised in 2023, and with Q4 2024 unlikely to see a drastic increase, it is improbable that the year will match or exceed last year’s figures.
In summary, while Q3 2024 saw some resilience in deal sizes, the overall funding landscape for startups continues to face significant challenges, with a marked decline in both investment volumes and deal activity.
