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 microventure capital market. Here are some highlights from the findings:
- Although venture capital deal activity in the United States slowed slightly in Q3 2019 to 1,027 deals and $22 billion in capital deployed, full-year activity is still on track to set a new annual record.
- Early-stage investments (seed and Series A) accounted for 51% of the total deals completed in Q3 2019 and 19% of total dollars.
- Fundraising for venture funds remains robust, as nearly 300 firms have closed through Q3, with a total of $35 billion raised.
- With $6.1 billion raised in the first three quarters of 2019, micro-venture capital fund managers have already secured nearly 80% of the total capital ($7.8 billion) raised in 2018, and 2019 should outpace 2018 by year-end.
- In contrast to previous quarters, the number of expansion / late-stage funds closed declined steeply in Q3; only two funds closed for a combined $295 million.
- Early-stage funds in particular were quite successful in their raises, as on average they closed at or slightly above stated targets.
- The market for new fundraising continues to remain very active, as 1,027 funds are in market seeking $98 billion in capital.
- Vintages 2010–2016 are posting median IRRs of 14.9% (18.7% for vintage 2011 funds).
- West Coast–based managers continue to lead the U.S. venture capital scene, with only two of the 10 largest U.S.-based managers located outside of California. Sequoia Capital is estimated to hold the most dry powder ($4.5 billion) of all U.S.-based venture capital firms as of September 2019.