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Strong 2018 Venture Metrics Signal Healthy 2019

In another strong year for U.S. venture capital, 2018 reached industry record highs across multiple metrics, continuing a nearly decade-long growth trend. As highlighted throughout this report, the U.S. venture capital market remains buoyed by a number of factors including widespread technological adoption across verticals, along with a healthy exit and fundraising environment.

Some of the highlights of 2018 include:

  • U.S.-based VC funds raised $46.5 billion this year on 365 fund closures, representing nearly three times the amount of capital raised by U.S. VC funds in 2009. Despite the second lowest deal total over the last seven years, $97.8 billion was deployed in venture-backed companies, up 26% from last year’s previous record high. This is directly correlated to the growth in the number of $100 million plus “mega rounds.”
  • Exit volume by dollar was also quite robust in 2018, totaling $87 billion in aggregate exit — the largest figure recorded since the dot-com era. That being said, the total number of exits in the U.S. was the lowest since 2009, with four exits accounting for a combined $29.3 billion:
    • AveXis, Inc. ($8.7 billion)
    • Qualtrics, LLC ($8.0 billion)
    • GitHub, Inc. ($7.5 billion)
    • Tesaro, Inc. ($5.1 billion)

  • A record 239 micro-venture funds closed in 2018, securing an all-time high of $7.2 billion, four times the amount raised in 2009. Of the capital raised in 2018, 39% was secured by 88 first-time funds. Early stage strategies (including seed) account for the largest proportion of micro venture capital funds in market (63%) and the largest proportion of capital targeted (60%).
  • 2018 crowned a new title holder for largest VC. Tiger Global Management closed the 11th fund in their flagship series for $3.75 billion, becoming the largest U.S.-based venture vehicle over last year’s $3.3 billion fund from NEA. This latest fund makes Tiger Global the largest VC fund manager in the country by both funds raised in the past 10 years and estimated dry powder.*    

Based on very strong secular trends around technology creation and adoption, along with continued tailwinds for venture dry powder and fundraising, 2019 appears to be poised for another robust year.

 

*Please note, growth funds are excluded from venture capital analysis and as such Sequoia Capital Global Growth Fund III ($8 billion closed in 2018) is not included in the dataset. 

Preqin defines "growth" as funds typically taking significant minority positions in companies without the use of leverage. Targeting profitable, but still maturing, investee companies with significant scope for growth. Investment horizons are mid-to-long term, similar to those seen with buyout funds.


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Preqin partnered with First Republic Bank to prepare this information regarding U.S. Venture Capital. This report is for information purposes only and is not intended as an offer, solicitation, advice (investment, legal, tax or otherwise) or as the basis for any contract. First Republic Bank has not independently verified the information contained herein and shall not have liability to any third party in any respect for this report or any actions taken or decisions made based upon anything contained herein. This information is valid only as of September 30, 2018, and neither Preqin nor First Republic Bank will undertake to update this report with regard to changes in market conditions, information, laws or regulations after the date of this report. This report may not be further reproduced or circulated without the written permission of Preqin and First Republic Bank.


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