SEATTLE, April 9, 2019 /PRNewswire/ -- After setting
an all-time high in 2018, VC investment maintained its momentum in
the first quarter of 2019, according to the PitchBook-NVCA
Venture Monitor. The quarterly report is the authoritative
source on venture capital activity in the US entrepreneurial
ecosystem and is jointly produced by PitchBook and the National
Venture Capital Associate (NVCA), with support from Silicon Valley
Bank, Perkins Coie and Solium. For the first time, the
report includes a new section on venture investment in US-female
founded companies, which will be a recurring section in all future
reports. Continuing the developments of the past few years, larger
deals drove elevated total capital investment across fewer
transactions as valuations have again climbed to unprecedented
levels. These ongoing trends are largely due to increased investor
competition and the prevalence of mega-funds (VC funds over
$500 million). Corporate VC activity
as a share of overall VC activity reached a new high, doubling over
the past six years and underscoring the heightened role that CVC
investors are taking in large rounds at later stages. The exit
market retained some of its momentum from 2018, with outsized
liquidity events driving quarterly exit value higher. Lyft's IPO
and six VC-backed acquisitions over $650
million helped to carry exit value in 1Q 2019, with a host
of upcoming outsized IPOs poised to buoy exit value throughout the
year. Fundraising in 1Q cooled compared to 2018 levels but appears
primed to accelerate throughout the year as several prominent firms
are on the road with new vehicles seeking at least $1 billion.
To download the full report and data packs, please
click here. PitchBook and NVCA will also be hosting a
webinar in partnership with Silicon Valley Bank, Perkins Coie and Solium, on Tuesday, April 30, 2019 from 9:00am – 10:00am
PDT. Please click here to
register.
"Despite uncertainties around the sustainability of 2018's
record VC activity levels, the first quarter of 2019 bolstered
healthy figures and is on track for another strong year," said
John Gabbert, founder and CEO of
PitchBook. "Investors continue writing larger checks to more
developed startups, allowing late-stage companies the choice of
operating in either the public or private market after weighing
liquidity against transparency. When it comes to liquidity, there
are several highly anticipated technology IPOs around the corner,
and it will be vital to watch how private market valuations
translate to the public markets."
"Investment momentum from 2018 continued in the first quarter of
2019, and the industry naturally has a close watch on the big tech
IPOs this year. However, much of the focus remains on investing in
the new wave of successful companies—across many sectors and across
the country—building the next big thing, whether that's in areas
like cybersecurity, robotics, applications of AI & ML, cancer
treatments, neuroscience, or medtech," said Bobby Franklin, President and CEO of NVCA. "At
the same time, policy continues to affect the industry in a major
way, as the early 2019 government shutdown likely delayed the
string of expected VC-backed IPOs. Other policy areas like foreign
investment rules implemented via the FIRRMA legislation pose a
challenge to fundraising from foreign LPs and capital from foreign
co-investors into startups, and the administration's immigration
policy continues to push away the best and brightest entrepreneurs
to more welcoming countries."
Investment Activity
By quarter's end, investors
deployed $32.6 billion in VC funding
across 1,853 deals, a 10.5% increase in volume and a 22.5% decrease
in count compared to 1Q 2018. Angel & seed deal value reached
$1.9 billion in the first quarter,
but saw the greatest decline in deal count among investment stages,
falling 44.2% between 2015 and 2018. The largest angel & seed
stage deal of the quarter was a $37.0
million investment in bikesharing company, Wheels. Coming in
at 34.6x larger than the median deal size in 1Q, the Wheels deal
highlights the continued and intense investor interest in the
mobility space. Early-stage startups saw $9.3 billion invested across 487 deals in 1Q,
bringing the median size of early-stage financings up 36.0% YoY to
$8.2 million. Late stage investments
totaled $21.4 billion across 538
deals in 1Q 2019, marking the second consecutive quarter in which
late-stage capital investment surpassed $20
billion. Robust mega-deal activity contributed an outsized
52.2% of total late-stage deal value, up from 45.7% in 2018. The
convergence of the private and public markets continued in 1Q 2019,
with more than four VC mega-deals closing for every VC-backed IPO.
On the corporate VC (CVC) side, CVC investors participated in 316
venture deals in the first quarter, totaling $19.4 billion, maintaining momentum from the
rapid growth of 2018.
Exit Activity
The venture-backed exit market retained
some of its momentum from 2018 through the first quarter of 2019,
as exit value reached $46.7 billion
across 137 deals. While slightly lagging last year's pace in terms
of exit volume, outsized liquidity events drove quarterly exit
value higher. Acquisitions propelled the highest quarterly value
since 4Q 2014 and saw six deals closed over $650 million in 1Q 2019. The largest acquisition
this quarter was SAP's acquisition of Qualtrics for $8 billion, an extension of the strength seen in
enterprise software deals over the past few quarters. On the IPO
front, the US government shutdown contributed to a slow first
quarter for VC-backed IPOs, with only 12 public listings closed in
1Q 2019. Healthcare businesses notched 9 out of the 12 IPOs during
the quarter, led by Alector, a developer of drugs to combat
neurodegeneration, which debuted at a valuation over $1 billion. Kicking off a long list of upcoming
technology IPOs, ridesharing giant Lyft completed its IPO in 1Q.
This deal on its own, which valued the company at $21.7 billion on a pre-money basis, was nearly
greater than all other exits in the quarter combined.
Fundraising Activity
VC funds raised $9.6 billion across 37 vehicles in 1Q 2019, as
the record-breaking activity from 2018 cooled early in the year.
Fund count in the first quarter stayed nearly flat YoY, though
larger funds were raised. 31.4% fewer funds were raised in 1Q 2019
than 1Q 2018, suggesting that the number of funds raised may
decline in 2019 even if capital raised increases. Despite the
slowdown, 1Q 2019 continued 2018's trend of the VC mega-fund. Five
VC mega-funds closed in 1Q 2019, headlined by Technology Crossover
Ventures' $3 billion TCV X. The
highest growth in 1Q 2019 came from funds sized $250 million to $500
million. From 2011 to 2017, these VC funds comprised less
than 20% of fund volume. This fund size comprised 20.5% of funds
raised in 2018 and increased to 30.8% in 1Q 2019 across eight
vehicles. Several prominent firms, including Khosla Ventures,
Andreessen Horowitz, New Enterprise Associates and Vivo Capital,
are on the road with new vehicles seeking at least $1 billion.
The full report will include the following components:
- Overview
- Investment activity by stage
- SVB: Claire Lee talks
early-stage venture
- SVB: How life sciences accelerators drive innovation
- Deals by region and sector
- Solium: Avoiding common cap-table pitfalls
- Spotlight: Mobility tech
- Female founders
- Corporate VC
- Perkins Coie: Navigating
late-stage financings
- Exits
- Fundraising
- League tables
- Methodology
To download the full report, click here.
About PitchBook
PitchBook is a financial data and
software company that provides transparency into the capital
markets to help professionals discover and execute opportunities
with confidence and efficiency. PitchBook collects and analyzes
detailed data on the entire venture capital, private equity and
M&A landscape—including public and private companies,
investors, funds, investments, exits and people. The company's data
and analysis are available through the PitchBook Platform, industry
news and in-depth reports. Founded in 2007, PitchBook has offices
in Seattle, San Francisco, New
York and London and serves
more than 24,000 professionals around the world. In 2016,
Morningstar acquired PitchBook, which now operates as an
independent subsidiary.
About the National Venture Capital Association
The National Venture Capital Association (NVCA) empowers the next
generation of American companies that will fuel the economy of
tomorrow. As the voice of the U.S. venture capital and startup
community, NVCA advocates for public policy that supports the
American entrepreneurial ecosystem. Serving the venture community
as the preeminent trade association, NVCA arms the venture
community for success, serving as the leading resource for venture
capital data, practical education, peer-led initiatives, and
networking. For more information about NVCA, please visit
www.nvca.org.
Quote Sheet
Claire Lee, Head of
Early Stage Practice at Silicon Valley Bank
"The
abundance of capital prevails, though it remains concentrated in a
handful of cities and sectors. While US VC investment hit a record
high of almost $132.1 billion
invested in 2018, about 65 percent went into larger and later-stage
deals. First financings declined. That said, it is a
founder-friendly fundraising environment. SVB clients illustrated
this: One-third of our clients who raised a Series A in 2018 were
formed within a year of that raise. The majority of the remaining
two-thirds raising Series A formed within two years."
Andy Schwab, Managing
Partner at 5AM Ventures
"The
first quarter of 2019 was a robust start to the year for the life
science side of the industry. The IPO market continues to be strong
for life science startups, especially for biotech companies. While
cancer therapeutics, gene therapy and rare diseases continue to be
the leading types of life science companies receiving funding, we
are seeing exciting new companies in the fields of neuroscience,
immunology and the convergence of digital and biology. As 2019
continues, these will be some dynamic areas of the life science
sector to keep an eye on."
Matt Stapleton, Head of
Shareworks Startup at Solium
"As the trend for companies to
remain private longer continues, we are about to see some of the
highest profile VC-backed companies of the past decade make their
move in to the public markets. How they are received by public
investors will have a substantial impact on the activity of
late-stage and growth investors going forward. How the business
models of marketplace and gig economy companies get valued in the
public markets will also have an impact on the valuations
late-stage private companies are able to attract. We may see a
fundamental shift in the investment pace of late-stage companies in
the latter half of 2019 depending on the success of these
IPOs."
Jeff Clavier, Founder and Managing Partner at Uncork
Capital
"Funding trends we saw in Q4 2018 have all but
continued, despite an expectation by some that we'd see a cooling
off of activity. There is still pent up demand at pre-seed/angel
stage for entrepreneurs who need their initial financing to get a
startup off the ground. But all other stages have benefited from a
large influx of capital, and are able to raise increasingly large
rounds. High valuations and high velocity are still common
characteristics."
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