The health of the venture capital markets was the focus of much conjecture in 2019. But despite the lackluster performance of certain high-profile IPO’s, the last year of the decade actually demonstrated a favorable trend. According to PitchBook and SharesPost data, 2019 set a new record for overall dollars invested in the sector, suggesting that gloomy funding forecasts may have been exaggerated. Furthermore, of the fifteen largest funding rounds in 2019, eight of them closed in the back half of the year –signaling a possible acceleration in 2020. For additional insights, let’s dig further into the data.
Over the last ten years, investors have funneled nearly $430 billion into private tech companies, according to our analysis of Pitchbook data. While dollar volume has generally increased yearly, with a record $72.5 billion invested in 2019, the quantity of yearly deals has not followed the same trajectory. As illustrated in the chart below, the number of annual funding rounds has steadily decreased since peaking in 2015. Our analysis indicates that from 2009 to 2015, deal volume increased over 220% to 4,400 rounds, but has since decreased by more than 17% to 3,634 rounds in 2019.
As noted above, despite this decline in deal volume, total dollars invested has continued to climb to new levels. The reason for this trend is demonstrated in the second graph below.
As has been the case since 2013, the growth in total yearly funding has been driven primarily by an increase in the [size/number] of investments over $100 million. Moreover, dollars invested via these mega rounds have increased nearly 9x from 2013 to over $35 billion in 2019. Conversely, rounds smaller than $100 million have grown by only 85%. Thus, it appears that — where possible — investors are increasingly betting larger amounts on a smaller number of companies.
While 2019 didn’t experience the same growth in total funding as did 2018, the two preceding charts confirm that total funding for VC-backed tech companies still achieved an all-time high. 2020 should provide a clearer picture of investor appetite – we’ll report back with our findings.
|Company||Date||Round||Deal Size ($MM)||Post-Money Valuation ($MM)|
|Automation Anywhere||11/21/2019||Series B||$290||$6,800|
|Magic Leap||04/26/2019||Series D||$280||$6,693|
|Company||Date||Round||Deal Size ($MM)|
|Bright Health||12/16/2019||Series D||$635|
|Aurora Innovation||02/07/2019||Series B||$600|
|Magic Leap||11/18/2019||Series E||$500|
|Mission Lane||09/16/2019||Series A||$500|
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