VC megadeals are booming — and AI is surprisingly not the top category

Ask any VC if we’re still in a venture capital bear market and that investor will almost certainly tell you no, that funding is still flowing for good companies.

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That might sound like spin, because anecdotes abound about how rough it still is for those raising now. And for good reason. Down rounds — that is, raising at a lower valuation than a previous round, which founders want to avoid unless they have no choice — were still at near record highs through the first half of 2024, according to Aumni’s Venture Beacon report. Around 39% of late-stage deals were a down round, according to Aumni’s report. That covers Series B and beyond, with the biggest percentage of down rounds at Series C and beyond.

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Even Stripe — whose success no one questions — hasn’t fully rebounded to its 2021 $95 billion valuation as of a big secondary transaction that took place in July. Although it did climb back to $70 billion by then.

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But despite this kind of gloom, late 2024 stats are full of good news, too. For instance, new data from Crunchbase shows a downright boom in megadeals — funding rounds of $100 million or more.

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Crunchbase tracked nearly 240 mega-rounds for U.S.-based startups so far this year, which is already more than the 210 raised all of last year. 

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Even more interesting is that Crunchbase’s top category for these deals was not AI. Biotech and healthcare startups accounted for 87 mega-deals, compared to 26 for second-place category AI.

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Some of these rounds are admittedly crossover: companies working on AI for healthcare. For instance, Crunchbase calls out AI drug discovery company Xaira Therapeutics as one of the notable health tech megadeals. Xaira launched in April with a massive $1 billion round led by ARCH Venture Partners and Foresite Labs (both known for biotech), but with classic Silicon Valley VCs in the round, too, like NEA, Sequoia Capital, Lightspeed Venture Partners, SV Angel, and others. 

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We’d arguably call Xaira an AI company and included it in our ongoing list tracking AI startup megadeals. 

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But there were also deals like Superluminal Medicines’ $120 million Series A, led by Eli Lilly. While it is also using machine learning to speed drug creation, its focus is finding medications for certain small molecule receptors on cell membranes. That’s a hot area in biotech right now — no AI-washing required. The deal was backed by classic tech investors Insight Partners and Gaingels, as well as NVentures (Nvidia’s venture capital arm), which seems to be everywhere these days.

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Other biotech Series A and B megadeals include the $120 million Series B closed by Terray Therapeutics, which is also working on small molecule drugs; and the $100 million Series A Judo Bio landed to tackle kidney drugs. A new biotech megadeal seems to be announced every week.

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Beyond health tech and AI, another sector nabbing mega-rounds is cybersecurity, with 16 such deals so far this year. Examples include email security startup Kiteworks raising $456 million, data security startup Cyera raising $300 million, and cloud security startup Wiz raising a whopping $1 billion.

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There are a few other goods sign for founders at earlier stages. Pre-money valuations improved slightly for seed and Series A deals in the first half of the year, Aumni found. 

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The dealmaking in 2024 also appears to be at a similar pace as 2023, according to the Q3 PitchBook-NVCA Venture Monitor. In 2023 it clocked in at just under 16,000 deals, which was just a bit higher than the average annual activity before the pandemic and ZIRP-fueled frenzy of 2020-21.

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For those interested in learning more, TechCrunch Disrupt 2024 will host a session on the Builders Stage titled “What You Need to Raise a Series A Today” and another on “How to Raise in 2025 if You’ve Taken a Flat, Down, or Extension Round.”

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