📶 emerging markets ... not so hot anymore

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Good morning 👋

Thoughts and prayers to everybody affected by the fires outside LA right now. The videos I’m seeing on Twitter are insane.

In other news, emerging markets aren’t hot anymore, and allocators have cooled off investments into these markets.

We dive into the latest numbers in today’s piece.

Venture capital funding in emerging markets took a hard hit in 2024, with total investments dropping 41% year-over-year (YoY) to $9.1 billion, according to MAGNiTT’s latest report.

Deal activity followed suit, slipping 20% to 1,527 deals.

While fintech remained a bright spot, late-stage investments dried up, and global exits shrank 32%, underscoring the tough environment for liquidity.

Here’s how it played out:

Why it matters: Emerging markets have faced the dual pressure of macroeconomic headwinds and a global VC slowdown, especially for non-AI startups. As LPs tightened their wallets in 2024, funding dwindled, and late-stage capital became scarce​​.

But it’s not all doom and gloom:

What happens next: Signs of recovery could emerge in 2025 as global interest rates ease. MAGNiTT CEO Philip Bahoshy expects rate cuts to boost liquidity, setting the stage for a healthier funding environment within 6–9 months.

Expect these trends to shape the ecosystem moving forward:

2,500 investors from places like Accel, Bessemer, Insight, and USV are already members.

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- Clay

Here are the results from our poll question in yesterday’s piece:

Do you write annual updates?

🟨⬜️⬜️⬜️⬜️⬜️ Nope - too much work

⬜️⬜️⬜️⬜️⬜️⬜️ Yep - it helps me think more clearly and I want to update supporters

🟩🟩🟩🟩🟩🟩 Sometimes - but I'm inconsistent