KUALA LUMPUR (July 25): So far, 2024 has proceeded very much like 2023 in the startup world.

In a report on Wednesday (July 24), Crunchbase, which tracks trends, investments and news of global companies from startups to the Fortune 1000, said artificial intelligence (AI) is still the dominating talk of venture capitalists (VCs), that funding is slightly up but most VCs seem unsure if that’s a trend or a passing moment, and that the initial public offering (IPO) window is still only a bit ajar.

Crunchbase said it seemed like for most of last year, everyone pointed to 2024 as the year mergers and acquisitions (M&As) would make a big comeback after several quarters of being down.

It said that big comeback just isn’t happening — at least not for VC-backed startups.

The firm said that in fact, M&A is down through the first half of this year (1H2024), with only 904 deals involving startups consummated, per Crunchbase data.

There were more than 1,000 in 1H2024.

Crunchbase said the reasons are varying — from interest rates to regulations, to valuations still being too high — but the takeaway is that deals just aren’t getting done.

It said there are some, including two US$3 billion deals in 2Q2024: Merck buying privately held biotech EyeBiotech for as much as US$3 billion, and Hg buying AuditBoard for more than US$3 billion.

Crunchbase said while valuations have come down, apparently it has not been enough for buyers in the market.

It said in addition, the November US election hangs over everything — and buyers are likely to see what the regulatory atmosphere is expected to be like after the outcome, before making a big acquisition (although it seems one can expect a slow antitrust regulatory process, no matter what happens).

The firm said that there are, however, some reasons to be optimistic about an M&A revival.

It said the valuation reset that occurred after the market correction in 2022 and 2023, has had some time to settle.

Now acquirers have a much better idea of what they’re willing to pay for a company, and acquirees have a clearer sense of what they will accept.

Meanwhile, Crunchbase said semiconductor chipmakers have been in the news recently, as trade sanctions and stock prices have made headlines.

However, it said chipmakers also have caused a stir due to some of the big cash they’ve raised — or are about to raise.

Semiconductor start-up funding was up about 25% through 1H2024, as VC-backed companies raised about US$5.5 billion, per Crunchbase data.

The number includes huge rounds by the likes of PsiQuantum, Celestial AI and Etched.ai.

Just last week, both DreamBig Semiconductor and Halo Industries raised good-sized rounds.

What is leading to this renewed investor interest in chipmakers is AI.

“Folks are looking for specialised generative AI chips that are more cost-effective and energy-efficient, but also faster.

“Artificial intelligence is the driving reason chip giant Nvidia is now a US$3 trillion-plus company. And while shares of Astera Labs are off their highs, they are still well above their IPO price from March,” it said.

Crunchbase said investors do not expect things to slow down.

“While investing in semiconductor startups is highly specialised, those in the field say there is renewed interest and increased competition on deals,” it said.