Maryam Haque

by & filed under NVCA Blog, Research.

Now that you’ve had the weekend to digest the 4Q 2018 PitchBook-NVCA Venture Monitor released last week, it’s time to dive into more trends! NVCA President & CEO, Bobby Franklin, reviewed some of the big takeaways from 2018 in his VentureBeat article over the weekend. This blog post builds on those trends and themes with data and charts from the Venture Monitor, highlighting what we think are the eight most notable ones.

1. Historic year for capital flows across the venture cycle in 2018

Limited partners committed nearly $56 billion to 256 U.S. venture funds closed last year, the highest amount since the dot-com era. Nearly 8,400 venture-backed companies raised more than $130 billion in financing, surpassing capital invested at its height in 2000. 864 venture-backed exits surpassed a combined value of $120 billion, another high since 2000.

Looking ahead, VCs will be equipped with capital—thanks to five consecutive years with $34 billion+ raised and dry powder—to invest in startups should potential VC market corrections take into effect. The slated lineup of IPOs for large unicorn companies suggests 2019 may post another strong year for VC exit value, potentially yielding big distributions back to limited partners.

2. Bigger funds, investments, and exits

*Strategic acquisition by a corporation; **PE-sponsored acquisition

The growing trend of larger pools of capital across the venture cycle fueled the big numbers shown in #1 above. The median fund size (even if you take out California, Massachusetts, and New York-based funds), deal size, and exit size all jumped last year.

3. Fewer funds, investments, and exits

*Strategic acquisition by a corporation; **PE-sponsored acquisition

While pools of capital have increased, they are increasingly in the hands of fewer funds and companies. The number of funds closed in 2018 remained steady with 2017 but below a 2016 peak. The drop in overall deals was largely due to the stark decline in angel and seed investments. On the other hand, early stage and later stage VC posted a slight year-over-year increase in number of deals complete.

The number of disclosed acquisitions have seen the biggest dip in the past three years. At the same time, PE-sponsored buyouts are increasingly becoming a source for liquidity. IPOs emerged as a bright spot last year, thanks to the long-awaited opening of the tech IPO window.

4. Rising valuations & maturing companies

At the same time, median pre-money valuations have more than doubled since 2013 for Series A, B, C, and D+ rounds, with the median of the latter seeing a 3x increase. Coinciding with rising valuations has been the trend of older companies receiving funding across each series. The median age of a company receiving an angel/seed, Series A, or Series C deal reached a 13-year high.

5. Unicorns & mega deals make a mega mark

And what’s been the primary driving force behind these increases? Investments in unicorns and mega deals ($100M+). Both the number of investments into unicorns and into $100M+ deals in 2018 nearly doubled compared with 2017. As a proportion of total VC capital invested last year, unicorns attracted more than one-third, while mega deals attracted nearly half.

6. New players: types of investors + new VC funds

*Tourist investors are non-VC firms, non-CVC firms, and non-angels/incubators.

Investors participating in the startup ecosystem have diversified beyond the traditional and established VCs who have been around the block. Private equity investors, corporate venture capital investors, and tourist investors have all increased their involvement in VC deals. What’s more, first-time funds (many of which have spun out of established firms) have made their mark in 2018, reaching a 13-year high in terms of number of funds closed and capital raised.

7. Record year for life science investment

Last year, 1,308 life science companies garnered more than $23 billion, accounting for 15% and 18% of total VC, respectively (note: the life science share of total VC dollars is 20% when the $12.8 billion Juul investment is removed). While overall angel/seed investment has dropped, healthcare companies drew a significant portion of angel/seed deals in 4Q.

Setting aside recent volatility, a strong life science run on the public markets has also been a positive trend for the sector, with Moderna Therapeutics’ Q4 IPO representing the biggest biotech public listing ever, and healthcare companies accounting for seven of the 10 largest IPOs in Q4.

SVB recently released a “Trends in Healthcare Investments and Exits 2019” report that dives deeper into the sector.

8. VC activity still geographically concentrated, but bright spots in emerging ecosystems

Companies in California, Massachusetts, and New York attracted 79% of total VC dollars invested and 53% of total VC deals completed in 2018. While it hasn’t surfaced in the statistics yet, sentiment appears to be growing among investors (in those three states and across the country) on the opportunity in venture ecosystems outside the “big 3.”

Investors seem to be turning their heads more towards the growing talent pools, maturing networks and ecosystems, and favorable pricing in emerging ecosystems, in contrast to the the higher costs of living, operating costs, and valuations common on the coasts.

Of the states that had 20+ deals in 2018, Vermont, North Carolina, Ohio, Maryland, and Indiana all posted the biggest year-over-year increases in capital invested. The solid year of venture investing in these five states (and others) are positive signs for the growing opportunity for startup activity across the country.


Send your questions/comments on these and other VC trends to And be sure to tune in to the 4Q 2018 Venture Monitor webinar on January 29th at 9am PT/12pm ET. Register here.

Note: The data above is as of 12/31/2018 and is sourced from the 4Q 2018 PitchBook-NVCA Venture Monitor.