We pulled the key points out of Pitchbook’s sprawling report.
2 Minute Read
Pitchbook recently released their quarterly venture monitor report. The 37-page report is full of insight, so we pulled out the key points for you here. (You’re welcome!)
Note: Data for this report is US-specific
- Deal value will likely stay above $100b for the second year straight.
- Total VC investment slowed in Q3.
- Deal size still remains elevated. Megadeals ($50m+) still dominate and are set to hit a new record in 2019.
Angel and Seed
- Angel and seed deal sizes continue to rise to new highs with the median at $2.2m, as compared to <$0.5m a decade ago.
- Angel and seed deal count continues to drop, as companies look for other financing methods.
- Lowest number of early-stage VC deals since 1Q 2013.
- Early-stage deals are growing in size, with the median growing ot $6.3m.
- 44 early-stage mega-deals closed in 2019, with fintech deals paving the way.
- 3Q deal value was down relative to the past four quarters, but is regarded as a blip in a consistently growing late-VC stage.
- Large “ultra-late-stage” (private IPO) investments have become more common, often to clear up their balance sheet.
- AI/ML compose an increasing portion of late-VC companies.
- Average late-VC deal was $35m, down from $42m in 2018, but higher than any year prior to 2013.
- The West Coast continues to dominate VC activity.
- Software: Deal value approaches decade high.
- Pharma & biotech: Deal sizes and valuations falling, with deals focusing on early stage.
- Fintech: Deal value increases, with a focus on late-stage investment, including multiple outlier “mega-deals”. Fintech deal value hits new high.
- AI: Deal value on pace for record year, with valuations relatively volatile.
- Female founders on pace for record year of deal activity, with NY being the major hotspot for female-founded deals.
- Deal size continues to grow, but valuation growth remains slow compared to mixed or all-male founded companies.
- Tourist investors continue to have a strong presence across deals (60% of total deal value involved a tourist investor), participating in >$90b last year.
- Corporate venture capital slowed this year, but remains heavily involved (43% of deal value), with 1176 corporations participating in deals last year.
- Annual exit value skyrockets to over $200b YTD, compared to $127b last year, but are heavily skewed by unicorn exits. Exit count lies at 633 YTD versus 990 last year.
- 2019 holds the record for IPOs as a proportion of total exit value (82%).
- Pureplay SaaS has been priced more favorably as compared to more traditional businesses that are tech-enabled.
- Investor confidence continues to be bullish, with162 funds raising YTD, but a slow-down as compared to 2018.
- VC net cash flows continue to be positive, since 2012.
- Micro-funds (<$50m) dropped as a percentage of funds closed in 2019
- An increased focus on larger funds has resulted from increased LP interest in VC and a shift toward blitz-scaling, which is getting backlash after Softbank’s strategy with many of its investments.