Sequoia Capital, Andreessen Horowitz, Lightspeed Venture Partners… In 2024, the venture capital world is heavily focused on technology, healthcare, financial technology (fintech), and sustainability.
Table of content
- Introduction
- What is venture capital?
- How does venture capital work?
- The key stages of venture capital funding
- Top 15 venture capital firms in 2024
- Conclusion
In 2023, $170.6 billion of VC was invested in 15,766 deals, which was well below the $242.2 billion in VC invested across 17,592 deals in 2022. In fact, 2023 deal values were about $177 billion below the record levels achieved in 2021.
Venture capital (VC) investment levels in 2023 did not reach the record highs of previous years, but 2024 is expected to offer a venture capital environment full of opportunities. Economic uncertainties have made investors more careful in their decisions. This caution has led to certain sectors becoming more popular.
Venture capital (VC) firms play a crucial role in helping new businesses grow by providing the necessary funds and expert guidance. In 2023, global VC investments were concentrated in sectors such as technology, healthcare, financial services, innovation, renewable energy, e-commerce, and real estate. Looking ahead to 2024, the VC ecosystem appears promising.
The technology, healthcare, and fintech industries are expected to attract more investment, particularly with the rise of artificial intelligence (AI). Additionally, the sustainability sector will be one of the key areas driving venture capital interest.
By understanding these ongoing changes, new entrepreneurs and investors can better identify the right opportunities and recognise the factors that will influence where capital flows in the startup world.
This article takes a closer look at the top 15 VC firms globally, explaining their key areas of investment and the impact they have had on shaping industries.
What is venture capital?
Venture capital is a type of private equity financing that provides funds to startups and small businesses with the potential for high growth. Venture capitalists (VCs) invest in these companies in exchange for an ownership share, taking on high risks in the hope of significant returns. These investments often happen in different stages: seed funding, early-stage, and late-stage rounds. The main goal is to help businesses develop and expand, with the possibility of them going public or being acquired.
How does venture capital work?
The main aim of venture capital (VC) is to direct investment into the most promising ideas. This benefits not only the startup founders and their teams but also the investors. It can also benefit society, by providing access to new products or services that improve people’s lives. Ensuring that money flows to ideas that are likely to succeed involves much more than just making returns for investors.
With the growing venture capital industry and all the attention given to unicorns (startups valued at $1 billion or more before going public), major VC firms receive hundreds of funding applications every week.
Most venture capital funds outline on their websites the kinds of startups they are looking for (industry, technology, revenue, etc.), which helps to filter out those that don’t meet their requirements. This is where the VC investment process begins.
- Screening: The first step is called screening, where a VC firm reviews the thousands of funding applications they receive. A designated analyst will go through the startup pitch decks and pick out the ones that seem most promising at a glance (usually about 15-20% of the total).
- Partner Review: Once a startup passes the screening stage, the pitch deck is handed over to the VC fund’s partners for a more detailed evaluation. This is one of the toughest stages, as the startup must impress people with the authority to approve investments.
- Initial Meeting: This is the first meeting between the startup founders and the VC firm. It’s not just a ‘getting to know you’ session; the VC team is assessing whether they want to invest in this particular company.
- Internal Review: After the initial meeting, the partners of the VC firm will hold an internal review, typically every two to four weeks, to discuss the startups that seem to have the most potential. At this point, they may also discuss making offers to these companies.
- Due Diligence: Due diligence is a thorough review of the startup. The VC firm will examine the company’s business, identifying both risks and opportunities. Since several companies may be under review at the same time, the VC firm often uses technology to help with this process.
- Investment Committee: The findings from the due diligence process for each potential investment are presented to the investment committee. This committee usually includes the firm’s partners, along with some external advisors and managers. They make the final decision on whether to invest in the startup.
- Closing: Once a startup is approved for investment, the VC firm makes an offer, and a term sheet is created. This outlines the terms of the deal. Once the offer is accepted, the money is transferred to the startup, marking the beginning of their post-investment phase, with the VC firm now onboard.
The key stages of venture capital funding
Venture capital is typically divided into different stages, each designed to support a company’s growth at various points in its development.
- Seed Funding: This is the first stage, where capital is provided to help a company develop its product or service. It gives startups the funds needed to get their business off the ground.
- Series A/B/C Funding: These stages follow seed funding and aim to help the company grow. The funds from these rounds are often used to expand the business, improve operations, or enter new markets.
- Exit: Once the startup matures and reaches its goals, venture capitalists usually exit their investment. This is often done through selling the company, merging with another business, or going public by listing on the stock exchange through an Initial Public Offering (IPO).
Top 15 venture capital firms in 2024
1. Sequoia Capital
Sequoia Capital, founded in 1972 and based in Menlo Park, California, is one of the most influential venture capital (VC) firms globally. It has gained recognition for investing early in companies like Apple, Google, and Airbnb. Sequoia Capital remains a key player in the technology industry, managing over $55 billion in assets. The firm focuses on high-growth sectors like healthcare, artificial intelligence (AI), and financial technology (fintech). What sets Sequoia apart is its long-term approach, often staying involved with its portfolio companies for years, sometimes even decades.
- Notable Investments: Apple, Google, Instagram, Airbnb, WhatsApp
- Focus Areas: Technology, healthcare, and fintech
- Headquarters: Menlo Park, California
2. Andreessen Horowitz
Andreessen Horowitz, also known as a16z, was founded in 2009 by Marc Andreessen and Ben Horowitz. It has rapidly become one of Silicon Valley's top VC firms. With over $52 billion in assets under management (AUM), Andreessen Horowitz is known for backing disruptive companies like Facebook, Twitter, and Coinbase. The firm is unique in offering startups extensive resources, including access to a wide network of experts in areas like executive coaching, marketing, and technology development.
- Notable Investments: Facebook, Coinbase, Twitter, Airbnb
- Focus Areas: Technology, crypto, biotechnology
- Headquarters: Menlo Park, California
3. Tiger Global Management
Tiger Global Management, based in New York, has transformed into one of the top venture capital firms, particularly focused on tech companies in their growth stages. Tiger Global has significant capital, managing over $58 billion, and it often invests in rapidly scaling companies in sectors like consumer internet, cloud computing, and software. This aggressive approach has allowed it to participate in some of the largest venture deals globally.
- Notable Investments: Stripe, ByteDance, Coinbase, Facebook
- Focus Areas: Technology, e-commerce, fintech
- Headquarters: New York City, New York
4. Lightspeed Venture Partners
Founded in 2000, Lightspeed Venture Partners has made investments in over 400 companies worldwide. The firm’s focus spans industries such as SaaS (Software as a Service), consumer technology, and enterprise software. Lightspeed's portfolio is global, including investments in the US, India, Israel, and China, making it a well-known name in international venture capital. With over $25 billion in AUM, Lightspeed continues to back high-growth startups across the globe.
- Notable Investments: Snapchat, Giphy, Grubhub, Nest
- Focus Areas: SaaS, consumer technology, enterprise software
- Headquarters: Menlo Park, California
5. New Enterprise Associates (NEA)
New Enterprise Associates, or NEA, was founded in 1977 and is one of the largest VC firms globally, managing more than $25 billion in assets. The firm invests in various industries, including healthcare, technology, and life sciences. NEA’s long-standing history and strong network make it a trusted partner for startups aiming to grow and scale quickly.
- Notable Investments: Uber, Cloudflare, Coursera, Robinhood
- Focus Areas: Technology, healthcare, life sciences
- Headquarters: Chevy Chase, Maryland
6. Kleiner Perkins
Founded in 1972, Kleiner Perkins is one of the oldest and most prestigious VC firms in Silicon Valley. It is well-known for early investments in companies like Amazon, Google, and AOL. Today, Kleiner Perkins focuses on investing at the intersection of technology and innovation, with assets exceeding $9 billion. The firm continues to be influential, supporting companies that develop cutting-edge technologies.
- Notable Investments: Amazon, Google, AOL, Netscape
- Focus Areas: Internet technology, healthcare, green tech
- Headquarters: Menlo Park, California
7. Accel
Founded in 1983, Accel is a venture capital firm that focuses on early-stage technology companies. With offices in Palo Alto, London, and Bangalore, Accel maintains a global outlook. The firm has invested in some of the most successful tech companies, including Facebook, Slack, and Dropbox, making it one of the top firms in the tech investment space.
- Notable Investments: Facebook, Slack, Dropbox, Spotify
- Focus Areas: Technology, fintech, consumer internet
- Headquarters: Palo Alto, California
8. Bessemer Venture Partners
Bessemer Venture Partners, founded in 1911, is one of the oldest VC firms still in operation. With over $19 billion in assets, the firm is known for its focus on industries such as cloud computing, healthcare, and cybersecurity. Bessemer takes a disciplined investment approach, which has earned it a reputation for consistency in the venture capital field.
- Notable Investments: LinkedIn, Shopify, Twitch, Pinterest
- Focus Areas: Cloud computing, cybersecurity, healthcare
- Headquarters: San Francisco, California
9. Greylock Partners
Founded in 1965, Greylock Partners is one of the longest-standing VC firms in Silicon Valley. The firm has a strong track record of investing in companies that have transformed entire industries. With more than $3 billion in assets, Greylock Partners focuses on enterprise software, consumer internet, and healthcare, helping to build some of the biggest names in the tech world.
- Notable Investments: LinkedIn, Airbnb, Dropbox, Facebook
- Focus Areas: Enterprise software, consumer internet, healthcare
- Headquarters: Menlo Park, California
10. Index Ventures
Founded in 1996, Index Ventures has a unique dual-headquarters model, operating out of both San Francisco and London. The firm focuses on sectors like e-commerce, fintech, and mobility. Index Venture is known for backing companies with strong European roots, but its global approach allows it to tap into high-growth markets across different regions. With numerous successful investments, Index is considered one of the top international VC firms.
- Notable Investments: Dropbox, Skype, Zendesk, Betfair
- Focus Areas: E-commerce, fintech, mobility
- Headquarters: San Francisco, California
11. Dragoneer Investment Group
Founded in 2012 and based in San Francisco, Dragoneer Investment Group is a specialist in late-stage investments, often helping companies prepare for an initial public offering (IPO). With over $21 billion in assets, Dragoneer has been involved in some of the most notable IPOs in recent years. The firm’s expertise lies in helping tech companies scale rapidly as they approach the public markets.
- Notable Investments: Spotify, Uber, DoorDash, Databricks
- Focus Areas: Technology, fintech, e-commerce
- Headquarters: San Francisco, California
12. Technology Crossover Ventures (TCV)
Founded in 1995, Technology Crossover Ventures (TCV) focuses on providing growth capital to late-stage tech companies. With over $19 billion in assets, the firm has supported some of the most successful technology companies globally. TCV focuses on industries with rapid growth, such as software, digital media, and financial technology.
- Notable Investments: Netflix, Facebook, Airbnb, Spotify
- Focus Areas: Technology, fintech, software
- Headquarters: Menlo Park, California
13. OrbiMed
OrbiMed is one of the leading VC firms specialising in healthcare and life sciences. Founded in 1989, the firm manages over $18 billion in assets and has invested in a wide range of healthcare companies, including biopharmaceuticals and medical devices. OrbiMed is a top choice for startups in the healthcare industry, due to its deep expertise and strong connections within the sector.
- Notable Investments: Intarcia Therapeutics, Axovant, Intercept Pharmaceuticals
- Focus Areas: Healthcare, biopharmaceuticals, medical devices
- Headquarters: New York City, New York
14. Battery Ventures
Battery Ventures, founded in 1983, focuses on investing in technology and industrial companies. The firm manages over $16 billion in assets and has a diverse investment strategy, covering sectors like software, consumer products, and industrial technology. Battery Ventures is known for its long-term partnerships and its ability to guide companies through multiple growth stages.
- Notable Investments: CoinBase, Databricks, Glassdoor, Groupon
- Focus Areas: Software, consumer technology, industrial technology
- Headquarters: Boston, Massachusetts
15. Khosla Ventures
Khosla Ventures, founded by Vinod Khosla in 2004, is a well-known VC firm that focuses on transformative technologies. The firm invests in diverse areas like clean energy, biotechnology, and artificial intelligence. With over $15 billion in AUM, Khosla Ventures is committed to supporting startups that have the potential to solve significant global challenges.
- Notable Investments: Stripe, DoorDash, Square, Impossible Foods
- Focus Areas: Technology, clean energy, AI
- Headquarters: Menlo Park, California
Conclusion
Venture capital firms are instrumental in fostering innovation and helping startups turn into industry leaders. The top 15 VC firms highlighted in this article have made significant contributions to various industries, particularly in technology, healthcare, and finance. As the venture capital landscape continues to evolve in 2024, these firms are expected to remain at the forefront, driving the next generation of innovation.
Understanding the role and focus of these leading VC firms can be beneficial for both entrepreneurs seeking funding and investors looking to partner with top-tier venture capitalists. By leveraging the experience and resources offered by these firms, startups can significantly accelerate their growth, helping to create a dynamic and thriving global economy.
Key Takeaways
- Venture capital (VC) is a type of private investment that helps new businesses and startups with the potential for rapid growth. It provides money and expert advice in exchange for a share of ownership in the company.
- While VC investment levels fell in 2023, the outlook for 2024 looks positive. There are expectations for growth in sectors like technology, healthcare, financial technology (fintech), and sustainability.
- The VC process has several important stages. It starts with screening applications, followed by a review by partners, initial meetings with startup founders, detailed checks (due diligence), and final decisions by an investment committee. This process aims to find and invest in the most promising startups.
- Some of the top VC firms in 2024 include Sequoia Capital, Andreessen Horowitz, and Tiger Global Management. These firms are known for making significant investments in important industries and for their role in encouraging innovation.
- Venture capital firms play a key role in promoting innovation and helping startups become successful leaders in their fields. They provide essential resources and connections that can help a company grow and thrive in a vibrant global economy.
