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Venture Activity Slows With Pandemic Challenges

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.

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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 April 2020 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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