Each quarter First Republic partners with Preqin, a leading source of fund performance data, to offer you an in-depth review of the U.S. venture capital industry with coverage of fundraising, deal totals and exits, plus a detailed examination of the micro venture capital market. Here are some highlights from the findings:
- Following a robust 2019, U.S. venture capital activity slowed considerably in Q1 2020, in part, due to the economic and business impact of COVID-19. A total of 963 deals were completed in the U.S. in Q1 for an aggregate $27 billion, a 19% decline from 1,191 deals in Q1 2019.
- Exit activity increased over the prior year, with 147 VC-backed exits valued at an aggregate $26 billion, in contrast to Q1 2019’s 142 exits at $14 billion.
- In terms of fundraising, 83 U.S.-based venture capital funds held a final close, down from 109 in Q1 2019. That said, those funds that closed raised $27 billion, a substantial total representing over half of the capital raised in 2019 ($50 billion). Mega funds drove this number as seven funds closed at over $1 billion, compared to just six in all of 2019.
- At the other end of the market, funds that raised $50 million or less accounted for only 42% of total funds closed, the lowest quarterly level in 10 years.
- The fundraising pipeline has grown to record heights, with 1,085 funds seeking $99 billion in commitments. Four of the 10 largest U.S.-based funds in market focus on healthcare, showing investor interest in the sector.
- Following 2019’s record fundraising year, micro-VC momentum slowed significantly in Q1 2020. Micro-VC funds (sized at $100 million or less) secured just $1.1 billion, with only 47 funds reaching a final close. The funds that did close, however, did so with success as funds closed spent an average of only 15 months on the road.