Despite the negative publicity surrounding it in recent months, venture capital is quite well, thank you.
There was doom-and-gloom all around in the venture capital industry after the failed WeWork IPO and the fund-raising travails of Softbank’s second Vision Fund. But under the hood, VC is humming along rather nicely, says Dan Primack at Axios.
Dealmaking in November and December
According to Primack, quoting Pitchbook figures, venture capital raised by start-ups in November and December (to date) exceeded the amount raised in the same period in 2018.
Axios’ Pro Rata lists 23 VC deals
This week’s issue of Axios Pro Rata listed 23 deals ranging in value from $3.75 million to $635 million. Ventures funded included
- P2P payments in Africa
- Autonomous submersible vehicles
- Soccer player performance analytics
- Mobile crime mystery games
- Radar chips for autonomous vehicles
- Auto inspection robots, and
- Health insurance
Total deal value was north of $ 1.1 billion.
Pitchbook’s 2020 venture capital outlook
The PitchBook Analyst Note: 2020 Venture Capital Outlook for 4Q 2019 provides an inkling into trends forecasted in the VC industry in 2020. These include
- CVC activity will reach a new record in 2020
- 2020 will mark a new annual record for US mega deals
- The median US VC fund size will top $ 110 million – an all-time high
- At least three direct listings of VC backed companies valued over $ 1 billion will close in 2020
Corporate venture capital deals hit new record
Separately, a new report by CB insights said that investments the financial services firms into start-ups hit a new record this year, as reported by CNBC.
Investments in start-ups by financial services firms were worth $ 8 billion in 2019 from a record 329 deals.
Banks, particularly, are finding venture investing highly attractive, and a useful diversification from their main business activities. Those have been adversely affected by falling interest rates.
Corporate venture deals emanating from financial services have zoomed 500% from 2014 through the third quarter of 2019.
Meanwhile the IPO market…
Even though the S&P 500 is likely to report its best year ever, IPOs are still outperforming the equity index. Except for a minor blip in late October, the Renaissance IPO index has performed better than the S&P 500 throughout this year.
In conclusion
“Only widespread calamity, beyond the private markets, has historically proven to deter venture capital,” says Primack. “A few high-profile flameouts won’t do the trick.”
[Related Story: VC Giant Sequoia Capital Raises $3.4 Billion for U.S. and China Investments ]