Global private equity and venture capital deal value grew in the first quarter, although the volume of transactions declined from the same period in 2023. Deal value climbed 5.1% to $130.61 billion for the first three months of 2024 from $124.30 billion for the same period in 2023. The number of deals slid 12.8% year over year to 2,880 as of quarter-end, according to S&P Global Market Intelligence.
The value and volume of global venture capital deals declined during the first quarter of 2024. The number of transactions fell to 3,647 from 4,438.
The aggregate transaction value amounted to $71.57 bn from January to March 2024, representing a 2.37% decrease compared to the $73.31 bn total during the same period in 2023.
On a monthly basis, venture capital transaction value came to $19.80 billion in March 2024, a 40.2% drop from $33.09 billion in March 2023. The number of funding rounds declined 22.7% to 1,146 from 1,483 over that timeframe (see Potential of Artificial Intelligence in Investment).
Global venture capital investment value
The technology, media and telecommunications sector continued to dominate global venture capital investments in March, capturing the largest share of the value of funding rounds at 28.4%. The consumer sector followed, accounting for 25.1% of the total investment value.
Application software companies led investments in the technology, media and telecommunications sector with 436 private equity-backed funding rounds in March. Deal count was down from the 723 rounds recorded a year earlier. Systems software companies followed with 223 funding rounds (see aboute Impact of AI on Investment Strategy).
In the biggest funding round for the month, fitness clubs operator Equinox Holdings Inc. raised $1.80 billion in a round of funding co-led by new investor Sixth Street Partners LLC and existing investor Silver Lake Technology Management LLC (see Total Assets and Investment of Euro Area Insurance Corporations).
In the next-largest deal, automobile manufacturer Zhiji Motor Technology Co. Ltd. raised $1.11 billion in its series B funding round.
Private equity and venture capital deal value
The increase in deal value during the first quarter underscores the upbeat sentiment among private equity firms in 2024. According to Market Intelligence’s Outlook, 60% of the general partners surveyed expressed optimism about deal activity in 2024, a jump from 34% in the previous year’s survey.
Looking at the monthly data, total transaction value dipped 52.2% to $32.10 billion in March compared to $67.13 billion a year earlier.
On an annual basis, the number of March deals fell 22.8% to 887 from 1,149 transactions.
Europe posted the highest deal value in March, at $13.77 billion, up more than 72% from the same period in March 2023.
Private equity entries in the US and Canada plunged 74.9% year over year to $10.73 billion for the month, while investments in Asia-Pacific totaled $5.91 billion, down 63.1% year over year.
The technology, media and telecom sector had the most deal activity, with 311 private equity-backed transactions.
Within the sector, application software recorded the highest number of transactions, at 145, followed by interactive media and services as well as systems software, with 27 deals each.
For the biggest transaction in March, Cinven Ltd. agreed to buy a majority stake in Alter Domus Participations SARL in a transaction that values the fund administrator at €4.9 billion.
For the month’s biggest round of funding, fitness club operator Equinox Holdings Inc. secured about $1.8 billion in fresh capital from investors led by Sixth Street Partners LLC and Silver Lake Technology Management LLC.
Private equity M&A deals
Private equity and venture capital investments in the payments sector surged 82% year on year in 2023, reaching $24.65 billion, the highest total value since at least 2019.
M&A activity dominated the investment landscape, comprising 63.3% of the total investment, while funding rounds accounted for the remaining roughly 36.7%.
The payments sector includes payment processors, payment service providers and gateways, mobile wallets, money transfer and remittance, and payments infrastructure.
M&A supplants funding rounds
Private equity’s dominance in payments M&A reflects a shift in investor focus. The payments fintech market has matured and venture capital interest has diversified to other emerging sectors such as generative AI.
In 2023, payments startups also had fewer late stage deals than the prior years.
Roughly half of venture capital-invested startups haven’t raised capital in two years, according to an EY analysis. The other half that raised cash, only 3,000 of those raised more than $20 mn, which isn’t a lot of money in today’s market.
Startups are going to need more capital and at the same time the valuation gap betweeen buyer and seller has narrowed from two years ago.
In the second quarter of 2024 through April 1, private equity-backed investments — including whole company and minority stake acquisitions, asset deals and funding rounds — totaled $5.86 billion, marking a notable increase compared to the $3.45 billion recorded for the entire second quarter of 2023.
The decrease in the number of deals within the payments sector since the first quarter of 2021 highlights the trend of declining funding rounds.
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AUTHORS: Maira Imtiaz, Annie Sabater, Karl Angelo Vidal – S&P Global Market Intelligence analysts
