The year of 2018 saw a total of $254 billion invested globally into 18,000 Venture Capital startups via venture capital financing a 46% leap from 2017’s figures—with 52% ($131 billion) landing in the US alone is showing a strong Venture Capital Status in 2019.
2019 Venture Capital status figures are still coming to light, but initial reports show that 2018’s pace has abated to an extent. Crunchbase data shows first quarter deal volumes of $75 billion, a growth of just 6% YoY. The reasoning behind this slowdown points primarily to dampening appetite for Chinese investments. The second and third quarters are historically the most active investing periods, so as the year unfolds, a clearer picture of this trend will appear.
Despite the industry appearing relatively healthy, an unprecedented trend of fewer funded companies, but larger round sizes has emerged. This report takes a comprehensive look at the VC market of 2019 and the macro headwinds behind its current state, followed by the opportunities and threats that loom on the horizon. Because 2019 seems to be bringing an end to the current run in the box set of VC’s annals, the period bookended between Facebook’s 2012 IPO and Uber’s 2019 debut is a fascinating one to look back on.
The “institutionalization” of entrepreneurship is an interesting behavioral trend through more pattern-matching used to judge a startup’s potential for success. This may have resulted in reduced VC funding, due to investor interest being narrowed into specific areas, such as:
Second-time founders win: Stanford University research states that “the number of prior firms going public [per founder] increases the next firm’s revenues by an average of 115% each.”
The “Ivy League” fast track: Prestige from an association with renowned investors, or accelerators, can assist a startup’s prospects. For example, Y Combinator accelerated startups are 3x more likely to become unicorns.
Founder profiling biases: gender, ethnic, geographic and even alma mater investment preference imbalances actually work against VCs, by giving them a smaller sandbox of startup opportunities to pick from.