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Venture Capital Deal Activity on Pace to Reach a New Annual Record

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.

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 October 2019 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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