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Laxman Pai, Opalesque Asia: Artificial intelligence (AI)-related companies raised 37% of total venture capital (VC) activity last quarter, similar to the level seen in Q2 2024.
Four large investments that amounted to nearly $7 billion in artificial intelligence (AI) companies helped prevent venture capital (VC) activity from significantly dropping quarter over quarter, said a study by Ernst & Young.
For the quarter, VC investment totaled $38.0 billion, down 12% from the $43.5 billion raised in Q2 2024. The Federal Reserve's decision to lower interest rates by 50 basis points in September was a good sign. This lowers the cost of capital, rallies public markets, and sets the stage for more exit activity going forward.
While the VC market is still a long way from returning to the heady days of 2021, the market passed the $100 billion mark for the seventh straight year. Even though the deal count continues to decline, this is the reality of a market that must rationalize the frenetic activity we've seen in the past several years.
Meanwhile, Fund formation is down 36% quarter over quarter, to $23 billion. However, year to date, it's up 25% over the same period in 2023.
Four of the top 10 largest deals last quarter were for AI-related companies, continuing a trend that has carried the market and IT sector now for the last few years. IT sector was followed by health care and business and financial services. The market continues to see reduced activity in FinTech co...................... To view our full article Click here
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