Tracxn, a leading global SaaS-based market intelligence platform, has released its Geo Quarterly Report: US Tech Q1 2024. The report, based on Tracxn’s extensive database, provides insights into the US Tech space.
The US Tech startup ecosystem is the largest tech startup ecosystem in the world, with a total of more than 303k companies, of which 82k are funded. In 2024 to date, this space has witnessed $19.5B in funding, accounting for 53% of the global funding of $37 billion. The US also ranks first in terms of country-wise startup funding.
Despite this, Q1 2024 has become the least funded quarter in the past five years, with a 6% drop in funding compared to the previous quarter (Q4 2023). Q4 2021 was the highest funded quarter in this space, after which the funding started to experience a steady decline. This decline in funding can be attributed to the ongoing macroeconomic conditions and shift in investor interest in scalable and profitable businesses.
Q1 2024 has witnessed a total of $19.5 billion in funding to date (till March 15, 2024), but a 46% plummet from $36 billion raised in the same period in Q1 2023 (till March 15, 2023). However, this is only 6% lower than the $20.7 billion raised in the same period in Q4 2023 (till December 15, 2023).
Seed-stage funding witnessed a decline of 21% to $1.3 billion in Q1 2024 to date from $1.6 billion in the same period in Q4 2023. Companies in this space attracted early-stage investments worth $8.5 billion in Q1 2024 to date, a 4% drop from $8.86 billion raised in the same period in Q4 2023. Late-stage funding stood at $9.7 billion in Q1 2024 to date, a minor dip of 4% from $10.1 billion raised in the same period in Q4 2023.
The number of $100M+ rounds in the US tech startup ecosystem rose slightly to 44 in Q1 2024 to date, out of which three crossed the $500 million mark - Epic Games, Figure, and Magic Leap. Epic Games secured a large sum of funding, worth $1.5 billion, in a Series F funding round.
Seven new unicorns have emerged in the first quarter of 2024 so far. Figure, Lambda Labs, Bugcrowd, NinjaOne, Zum, XREAL and Eleven Labs are the companies that became unicorns in Q1 2024.
In terms of exits, there was a fair bit of activity in the US Tech sector in Q1 2024. 362 acquisitions took place in Q1 2024 to date, as against 280 in the same period in Q4 2023 and 405 in the same period in Q1 2023. Eight IPOs took place in Q1 2024 to date, all of which were from the Life Sciences segment.
Enterprise Applications, Life Sciences and HealthTech were the top-funded sectors in Q1 2024 based on funding till date. Companies in the Enterprise Applications segment secured funding worth $7.8 billion in Q1 2024 to date, a 6% decrease compared with the same period in Q4 2023, and a plunge of 59% from the same period in Q1 2023.
Funding in the Life Sciences segment stood at $4.6 billion in Q1 2024, a growth of 11% from Q4 2023 in the same period and a growth of 17% compared to Q1 2023 in the same period. In the HealthTech sector, funding rose 26% to $2.26B in Q1 2024 to date from $1.8 billion raised in the same period in Q4 2023.
Among the cities, San Francisco takes the lead in terms of funding in Q1 2024 to date. Tech startups based in San Francisco raised $3.7 billion during the quarter, followed by those headquartered in New York City ($2.4 billion) and Cary ($1.5 billion).
Y Combinator, Techstars and New Enterprise Associates are the overall most active investors in the US Tech ecosystem to date. In Q1 2024, Alumni Ventures, Gaingels and a16z were the top seed-stage investors, while General Catalyst, Google Ventures and Sequoia Capital are the most active early-stage investors. Altimeter Capital, SoftBank Vision Fund and EDBI are the top late-stage investors in Q1 2024.
Despite the downward funding trend, sectors like AI, EV, and Healthcare are expected to grow, attracting investor interest in the coming months. With external forecasts predicting growth in the GDP of the country, companies that can show a sustainable business path will likely catch the eyes of investors and raise funding.
