PitchBook has shared its H2 2024 VC Tech Survey: Investor Insights on AI, Dealmaking, and Fundraising.
PitchBook has noted that in this update VCs highlight stable deals, decode AI and deep tech trends, express sector “saturation concerns,” and describe how priorities are shifting to “underinvested areas.”
The H2 2024 VC Tech Survey gathered insights from 53 venture capital investors to explore their views on “technological innovation and fundraising expectations within the VC ecosystem.”
Building on the themes of the H1 2024 VC Tech Survey, this update from PitchBook includes a survey that offers a continuous look at how perspectives on technology and the venture capital industry have “shifted over the past year.”
Overall, the H2 2024 VC Tech Survey revealed a measured “sense of optimism
among venture capital investors, particularly regarding fundraising activity and technological innovation.”
Notably, 75% of respondents reported that the “percentage of equity acquired in funding rounds has remained consistent, highlighting stability in deal structures.”
Additionally, 42% of investors plan to raise “a new fund within the next year, while another 45% anticipate doing so within two years, indicating steady momentum in fundraising efforts.”
However, 14% of respondents in H1 2024 and 8% in H2 2024 indicated they do “not plan to raise another fund, reflecting a notable portion of VCs opting out of fundraising.”
This highlights the lingering impact of 2021’s inflated valuations, which wiped out “many smaller managers, and provides some data to support the trend.”
PitchBook also mentioned that for the first time, “a plurality of respondents identified 2024 as the year they expect to see the highest IRR on their investments, suggesting a positive outlook for portfolio performance in the near term.”
PitchBook further noted in the research report that on the technology front, AI continues to “dominate investor sentiment as the most dynamic area for growth.”
The research report from PitchBook also mentioned that confidence in AI’s disruptive potential has “risen substantially, with 47% of respondents now expressing bullish expectations, up from 34% in previous surveys.”
Respondents viewed healthcare AI, AI infrastructure, and biotech “as the most promising areas for investment in the coming year.”
These sectors are praised for their potential “to drive efficiencies, leverage expansive data pools, and deliver measurable returns through innovations in drug discovery, gene research, and advanced infrastructure tools.”
Other promising opportunities include “defense, fintech, and energy, driven by geopolitical considerations and sustainability imperatives.”
Deep tech investments are also “gaining traction, with robotics and quantum
computing emerging as leading focus areas.”
According to the update from PitchBook, these trends highlight advancements such as new “autonomous systems in robotics and breakthroughs in quantum algorithms and hardware, underscoring their transformative potential across the manufacturing, logistics, and cryptography segments.”
Despite these optimistic trends, concerns about “oversaturation persist.”
PitchBook pointed out that many investors view sectors “such as chatbots, customer support, and general-purpose AI tools as offering diminishing returns due to market crowding and intense competition from dominant players such as OpenAI and Google.”
The report from PitchBook noted that similarly, subsectors in healthcare and fintech face criticism for being “saturated with startups that lack meaningful differentiation or scalability.”
PitchBook concluded that broader concerns include the “commoditization of foundational AI models, such as large language models (LLMs), and a proliferation of redundant applications that fail to deliver unique value.”
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