Venture Capital Funds Reveal Strong Pipeline for Private Growth Companies
August 21, 2019 | Blog

Venture Capital Funds Reveal Strong Pipeline for Private Growth Companies

Venture Capital Funds Reveal Strong Pipeline for Private Growth Companies

With the summer doldrums in full swing and most of this year’s mega-IPOs behind us, investors now have the time to take stock and ask an important question: will the private growth train keep steaming ahead? That is to say, will venture capitalists accept the tracks that propelled this expansion as the end of the line, or will they continue to deploy capital to drive the innovation and disruption engine even further? While we can’t tell the future, what we can say is that one hundred different venture funds each with over $100 million have been raised in 2019, according to PitchBook. Collectively, these funds represent over $33 billion in investable capital.


VCs in the United States took the lion’s share of new capital so far this year. This observation aligns with the “best house on the block” narrative being played out in public markets and — more importantly — signals that investors expect the U.S. to remain the epicenter of global innovation, especially considering that VC fund commitments last about ten years.

Select VCs Exhibit Strong Showings in 2019

A handful of venture capitalists are leading the pack. Of the 92 VCs we examined, the top fifteen accounted for about half of the total funds raised this year, with each having gathered at least $500 million in funds of the 2019 vintage. This relative concentration is telling: the limited partners and family offices that provide capital for these funds seem to be choosing “winners,” or at least those VCs with a superior track record. Accel raised the most funds by count, while TCV raised the most by dollar amount. Of the three Accel funds, two are based in the U.S. while the other is based in the UK; PitchBook claims the two U.S. Accel funds have already made ten investments. The $3 billion-plus TCV X fund will back private growth companies and seek significant positions.


Despite these large amounts raised, much of the capital has yet to be invested. Of those funds with deployment stats, over 92 percent of the capital on average remains as dry powder. When looking at those same funds collectively, only 5 percent of their capital has been deployed. If other funds without deployment statistics are acting in similar fashion, then roughly $31.3 billion of the $33 billion available has yet to be invested. Whether the investment pace will pick up over the remainder of the year or not, the funds available show a healthy pipeline of capital for private companies.


Another interesting facet to consider is that these one hundred funds will be fully eclipsed by SoftBank’s upcoming Vision Fund 2. This sequel fund has reportedly garnered over $100 billion in investor commitments, but has yet to officially close. Still, the money raised by other, more traditional VCs ought to benefit private U.S. companies as they seek capital for growth and disruption. We will continue to monitor the supply of capital available, and the corresponding effects it may have on Silicon Valley darlings and private growth companies moving forward.

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CONFLICTS

This report is distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation, and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own financial advisors before making any investment decisions. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about the subject matter therein, including all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be during their employ directly or indirectly related to their specific views contained in this report.

Analyst compensation is indirectly based upon the growth and success of SharesPost, Inc., including the overall performance of its subsidiaries, the individualized performance of any such analyst, and the development and progression of the overall research effort. SharesPost, Inc. earns revenue from, among other avenues, brokerage sales, and therefore the analyst may indirectly benefit from research reports that have the ultimate effect of increasing trading activity, either through SharesPost Financial Corporation and/or with SharesPost Investment Management, LLC.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.

Securities referenced in this report may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2019. All rights reserved.

James Cheap

James Cheap

James is a Research Analyst, Private Investment Research for SharesPost Research LLC. Prior to joining SharesPost, he was a Senior Research Analyst at Equilar with a focus in corporate governance and analytics.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

CONFLICTS

This report is distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation, and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own financial advisors before making any investment decisions. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about the subject matter therein, including all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be during their employ directly or indirectly related to their specific views contained in this report.

Analyst compensation is indirectly based upon the growth and success of SharesPost, Inc., including the overall performance of its subsidiaries, the individualized performance of any such analyst, and the development and progression of the overall research effort. SharesPost, Inc. earns revenue from, among other avenues, brokerage sales, and therefore the analyst may indirectly benefit from research reports that have the ultimate effect of increasing trading activity, either through SharesPost Financial Corporation and/or with SharesPost Investment Management, LLC.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.

Securities referenced in this report may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2019. All rights reserved.