VC landscape in Q2 2024
Global startup funding surged to $79 billion in Q2 2024, marking a 16% increase from the previous quarter and a 12% rise from Q2 2023. This growth, however, was largely driven by mega-rounds, which are fundings of $100 million or more.
AI remains a main trend — quarter-over-quarter funding to AI companies more than doubled to $24 billion, accounting for 30% of all dollars invested, making it the largest quarter for AI funding in recent years. Five out of six billion-dollar funding rounds went to AI companies. Elon Musk's xAI raised $6 billion, followed by CoreWeave with $1.1 billion. Wayve, Scale AI, and Xaira Therapeutics also secured billion-dollar investments. Outside AI, cybersecurity firm Wiz raised $1 billion.
Additionally, there are indications that larger M&A deals increased in Q2, providing much-needed liquidity to venture capital markets.
Looking forward
Although venture capital funding increased in Q2 2024, particularly in AI, the overall market outlook remains unchanged. Persistent issues such as revenue growth concerns, difficulties for startups in securing funding, geopolitical uncertainty higher standards at each investment stage, and a slower exit environment continue to influence the venture capital market.
SaaS companies in H1 2024
Public SaaS companies have shown mixed performance, with the BVP Nasdaq Emerging Cloud Index revenue multiple decreasing to 5,79x annualized revenue at the end of Q2 2024 down 10% compared to 6,44x at the end of 2023, demonstrating a cautious market sentiment.
The growth rate for SaaS companies has largely remained stagnant, with the median Annual Recurring Revenue (ARR) growth rate staying at 23% in June 2024, the same as at the end of 2023. This stability suggests that the industry is still dealing with the effects of the recent economic downturn. It highlights that many businesses have not yet developed a new go-to-market / commercialization strategy. Many continue to rely on old models that are no longer effective.
CEE SaaS Index updates for June 2024
CEE SaaS Index is a simple tool for startups and investors to value SaaS companies in Central & Eastern Europe based on revenue multiples from publicly traded SaaS companies from the CEE region, developed by Vestbee and Warsaw Equity Group.
While revenue multiples from publicly traded SaaS companies can provide a helpful starting point for valuation, currently available indexes are only based on US-listed SaaS companies, leaving the CEE region without relevant benchmarks, despite the region's thriving startup ecosystem and quadrupled VC funding over the last three years.
With projected growth and increased investment in CEE tech companies, a more appropriate valuation benchmark for regional startups and investors is required. To meet this need, Vestbee and the Warsaw Equity Group have collaborated to develop the CEE SaaS Index, providing a relevant benchmark for both regional and international investors.
Here are the key updates from the Index performance for June 2024:
- The median CEE revenue multiple at the end of Q2 2024 decreased slightly to 3,74x annualized revenues (3,85 at the end of Q1 2024), and decreased YoY (4,18 at the end of Q2 2023)
- Market capitalization of all companies included in the CEE SaaS Index raised to €2 billion — up 15% since the beginning of the year (€1.75 billion at the end of 2023).
- For comparison, the median US revenue multiple at the end of Q2 2024 decreased to 5,79x annualized revenue — down 10% compared to 6,44x at the end of 2023 and is 68,5% lower than its record high of 18,34x in December 2021.
- US multiples have seen a faster pace of decline than ones in the CEE over the last quarter, and they are now 54% higher than CEE multiples (down from 90% at the end of 2023).
- CEE-based companies are growing slower than their US counterparts — 10,3% vs 19% YoY median revenue growth rate.
