Venture Capital in 2024: A Recovery, But Not for Everyone

Venture markets don’t pivot overnight. While the startup world thrives on disruption and innovation, the reality is that venture capital (VC) is highly cyclical—shaped as much by macroeconomic forces as by the cutting-edge companies it funds.

In 2024, we saw a market that appeared to be rebounding. Total deal value surged by nearly 29%, and late-stage capital showed signs of life after years of stagnation. But beneath the surface, it was a story of divergence.

AI dominated. Startups building foundational models, enterprise AI solutions, and semiconductor innovations commanded massive premiums. If you weren’t AI or AI-adjacent, the capital wasn’t flowing as freely. Seed-stage AI startups saw a 42% valuation premium over their non-AI peers, while Series B AI startups enjoyed a staggering 50% premium. The five largest deals of 2024? All AI.

Meanwhile, exit markets—historically a key driver of venture liquidity—remained sluggish. While IPOs saw a modest uptick, they were nowhere near the highs of the Zero Interest Rate Period (ZIRP). Mergers and acquisitions (M&A) were hamstrung by regulatory scrutiny and a bid/ask spread that kept buyers and sellers apart. Without a meaningful return of liquidity, LPs remained cautious, creating downstream effects on fundraising and capital deployment.

And then there was the bond market. Despite three rate cuts from the Fed, the 10-year Treasury yield climbed, making capital more expensive and compressing valuations outside of AI. Simply put: The Fed was easing, but the market wasn’t cooperating.

Download the full report here: https://elevateventures.com/wp-content/uploads/2025/03/ev_2025VentureReport-1.pdf

Read additional commentary on the Research Desk Substack: https://elevateventures.substack.com/

What’s Next for 2025?

The defining question heading into 2025 isn’t whether venture is recovering—it’s what kind of recovery this will be. The era of easy money is over, and investors are demanding efficiency, durability, and clear paths to profitability. AI will continue to be both an accelerant and a disruptor, creating winners and leaving others behind.

In our latest Venture Report, we take a deep dive into:

✅ The macroeconomic forces shaping venture capital’s trajectory

✅ How AI is reshaping valuations and investment priorities

✅ The fragile state of exit markets and what needs to change

✅ The evolving role of the Midwest in the national VC landscape

VC isn’t just about riding the waves—it’s about spotting the undercurrents before the rest of the market catches on. Our report offers a nuanced look at the layers beneath the headlines, equipping founders and investors with insights to navigate what’s next.

Download the full report here: https://elevateventures.com/wp-content/uploads/2025/03/ev_2025VentureReport-1.pdf

Read additional commentary on the Research Desk Substack: https://elevateventures.substack.com/