2019 Could be a Record-Breaking Year for Venture Capital

April 29, 2019

Friday’s GDP report was somewhat of a shocker.  Gross domestic product grew by 3.2%. Quite healthy by most any measure.  Contrary to popular economic opinion, economic growth is strong.  There is absolutely no evidence yet of a recession.

Could the strength in the overall economy show up in venture capital markets?  The answer is yes. 

Last year venture capital blew through the roof at a massive $132 billion, breaking historical records.  Fascinatingly, 2019 could continue the booming. 

Here are 4 charts, produced by private equity data provider Pitchbook, that show the picture of VC through the first quarter of 2019.

#1 VC Deal Activity

The first figure is on US venture capital deal activity.  Activity is booming.  The first quarter of 2019 saw deal volume of almost $33 billion and deal count at 1,853.  The deal volume figure is almost 25% of what we saw in 2018, suggesting we’re roughly on pace to match the record-breaking year of 2018.  Amazing strength.

Source: Pitchbook

#2 VC Quarterly Investments

In the first quarter of 2019, we saw the second-highest quarterly capital investment in the past 10 years.  The only quarter to surpass the awesome start to 2019?  An almost unimaginable fourth quarter of 2018, which came in at more than $40 billion.

Source: Pitchbook

#3 The Massive Deals are Taking Over

The third figure showing the incredible state of venture capital today is the breakdown of VC deals (measured in dollars) by size of the deal. 

In orange are deals worth over $50 million.  The next largest deal size is $25 million to $50 million in light blue.  The remaining colors are for deal values less than $25 million. 

Fascinatingly, deals have become massive.  The deals worth more than $50 million accounted for more than 60% of all deals in the first quarter of 2019.  The beats even 2018, which saw massive deal values reach just shy of 60% of all deal values.  Again, amazing.

Source: Pitchbook

#4 Series D Pre-Money Valuations Reach a Record

The fourth figure on the state of venture capital is pre-money valuations.  Almost unbelievably, pre-money valuations for the top 75th percentile reached above $1 billion for the first time at $1.1 billion.  This set a record and far surpassed the previous record we saw in 2018 at $756 million.

Source: Pitchbook

Conclusion

Overall, venture capital in 2019 could continue the record-setting pace the world saw in 2019.  With the exception of perhaps the end of the 20th century and the first few years of the 21st century, there has perhaps never been a better time to be involved in venture capital than now.

Leave a Comment

Previous post:

Next post:

Real Time Web Analytics