Q1’24 Venture Pulse Report - Americas

The health and biotech sector continued to see active and healthy VC investment activity in the Americas during Q1’24. In the US, the deal sizes related to biotech acquisitions by pharmaceutical companies have remained reasonable, making them an attractive area for investment even within the current market. This, combined with the very interesting and novel science happening in the space, has led to continued VC investment across a diversity of healthcare verticals.

The exit environment remained mostly dry across the Americas in Q1’24. In the US, social media giant Reddit proved the largest exception, holding a successful IPO on the NYSE. Biotech also provided a bright spot for IPO exits, although at much smaller deal values; a number of biotechs had their offerings priced above range or, in some cases, above a revised range. With both IPO and M&A exit routes in an extended period of softness, the secondaries market has picked up considerably in the US, with some startups using secondary transactions in order to provide liquidity to their early investors and employees.

In Latin America, Brazil’s stock market continued to perform exceptionally well in Q1’24, although this performance has not incentivized a fresh round of tech exits as of yet. This likely reflects investor caution and concerns around the profitability patterns of late-stage startups in the country.

VC investors continued to take a cautious approach to investing in the Americas in Q1’24, focusing much of their investments on companies that have shown good results and the ability to right size their businesses. At the same time, there’s a growing number of startups that have failed to get meaningful momentum; this is making it increasingly difficult for them to raise funds or to convince their investors to deploy additional capital.

Q4’23 to just $766.5 million in Q1’24 — the lowest level seen since Q3’18. Deal volume in Canada also plunged, falling from 214 to 148 quarter-over-quarter. Despite the number of CVC deals only dropping from 42 to 35 between Q4’23 and Q1’24, total CVC investment in Canada during the same period dropped significantly — from $1.3 billion to $260 million. This highlights how corporates really pulled back from making large deals during the quarter. 

In Brazil, VC investors continued to focus their efforts primarily in the fintech space during Q1’24, with funding primarily going towards small and mid-sized deals, such as the $41.5 million Series B round by corporate card platform and expense services firm Conta Simples. Retail tech, smartech, healthtech, and edtech were among the other top sectors of investment in Brazil in Q1’24 — although investment in these areas is still relatively nascent compared to investment in fintech. Interest in agtech is also starting to grow in Brazil, with innovation activities to date primarily occurring internally among industry players or on fintechs looking to provide value chain services to industry participants, including farmers.

Heading into Q2’24, secondary deal volume and activity is expected to remain robust in the Americas as startups continue to look for ways to provide liquidity to early investors given other exit avenues are quite backed up. All eyes will also be on the US to see whether other companies decide to test the IPO waters in the wake of Reddit’s results. Should IPOs begin to rebound, there could be increasing pressure from LPs for VC firms to deploy capital.