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As you may remember from our deep dive a couple of weeks ago, Q3 was a bit of a dud for VC dealmaking — with investors writing €11.5bn worth of cheques over the summer, compared to the €47.6bn raised from January to June, per Sifted data. Is Q4 going to be similarly sluggish?
According to some VCs, at least, there’s hope for a strong finish to the year.
“There are still uncertainties, mainly around geopolitics and regulations, but overall we can be cautiously positive about the market,” says Markus Lang, a partner who leads Speedinvest's SaaS and infrastructure team. “I expect Q4 to be strong, with early-stage deal flow picking up even more, and the next wave of breakout companies — those that started during the last hype cycle — raising significant rounds.” Those startups will be “very appealing to growth funds, many of which still have deep pockets. I think the tides are slowly turning,” he adds.
Although raising a Series A still comes with a lot of hurdles, Barbod Namini, general partner at HV Capital, expects more deals at this stage compared to last year — “a trend that we’ve already seen across the first three quarters of the year,” he tells me. “Our growth team keeps seeing concentration into high-quality assets which are able to command strong premiums in an otherwise still comparatively quiet market. The trend, however, is clearly pointing in the right direction for a busier market going into 2025.”
But from some investors’ vantage points, the slew of companies coming to market may be more a factor of delayed fundraising.
Angel Invest managing partner Jag Singh tells me there was an “absurdly large” number of pre-seed companies that tried to raise money earlier in the year but weren’t able to — so they held off raising to strengthen their position before coming back to market towards year-end.
“We’re starting to see these companies emerge again (often with stronger business models), so I can already anticipate a wave of renewed activity from startups seeking capital before the close of the year,” Singh says.
As to which sectors VCs are eyeing? Speedinvest’s Lang is “especially bullish on the ‘old-school’ industries, like blue-collar sectors and energy, where AI is opening up huge opportunities to digitise and transform entire sectors all while maintaining profitability.”
Hanel Baveja, a partner at Creandum, says she’s seeing a big uptick in dealflow in AI (she points out vertical AI, in particular), fintech and B2B SaaS this quarter. She adds that founders who’ve shown they can be resilient this year are coming to raise with stronger fundamentals, and rounds are being preempted.
Will this supposed momentum last? I’m curious to hear your thoughts: are you seeing similar signs of a strong finish to 2024? Which sectors are seeing the most interest? VCs, how many cheques have you written so far in Q4? What types of metrics are you seeing from companies right now — and are they improving from earlier this year? I’m all ears.
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