Mega-Funds Fuel Strong Dealmaking, Particularly in Late Stage Startups and Unicorns as Investors Compete Fiercely for Deals; Several Outsized Exits Drove Exit Value & Provided Much-Needed Liquidity
SEATTLE, WA – October 9, 2018 – In the third quarter of 2018, investment into US venture capital-backed companies topped $27.8 billion, pushing 2018’s total venture capital (VC) deal value to $84.3 billion. At this pace, 2018 could hold the mark for most venture capital invested in the US in a single year, according to the PitchBook-NVCA Venture Monitor, the authoritative quarterly report on venture capital activity in the entrepreneurial ecosystem jointly produced by PitchBook and the National Venture Capital Association (NVCA). Findings reveal 2018 median VC deal sizes experienced double-digit percentage growth across all stages compared to 2017, the highest jump since 2015. The steady increase in deal sizes can be attributed to the growing number of mega-funds raised, as investors increasingly view larger vehicles as a competitive advantage to invest in high-quality startups. This can be seen by the growing proportion of venture investment in the late stage, which made up nearly 23% of total VC deal count, the highest percentage since 2011. Additionally, the VC exit market has shown signs of strength, with $20.9 billion exited across 182 deals in 3Q, bringing the yearly total to $80.4 billion. Sustained dealmaking in the later stage of the VC market is expected to drive more outsized exits for the duration of this market cycle, suppressing investor concerns over liquidity. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) today announced the appointment of Cassie Ann Hodges as Director of Communications effective immediately. Hodges comes to NVCA from the United Nations Foundation, where she served as Officer of Communications.
“I am very excited to welcome Cassie Ann to the NVCA team. Her diverse background in global and domestic strategic communications and stakeholder outreach will be a major asset to NVCA,” said Bobby Franklin, NVCA President and CEO. “Her deep expertise with entrepreneurial, membership and advocacy communications will be critical to NVCA as we continue our ongoing efforts to better serve the venture community, startups and entrepreneurs. We are thrilled to add someone as dedicated and dynamic as Cassie Ann to push our communications efforts to new heights.” (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) was excited to see continued progress on net operating loss (NOL) reform with passage of the “American Innovation Act of 2018” in the House of Representatives. H.R. 6756 passed by a vote of 260-156. The bill includes a proposal to protect the NOLs of startups by allowing startups to carry forward their losses and R&D tax credits accrued in the company’s first three years without regard to Section 382 of the tax code, which currently can create an unintentional tax penalty for startups. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) was pleased to see that the “American Innovation Act of 2018” includes a proposal to protect the net operating losses (NOLs) of startups. The proposal would allow startups to carry forward their losses and R&D tax credits accrued in the company’s first three years of existence without regard to Section 382 of the tax code, which currently can create an unintentional tax penalty for startups. Startups often accumulate NOLs when using investment capital to try and build a successful company. These NOLs most often are related to research and development and hiring, activities that public policy separately seeks to encourage. However, the Section 382 rules often do not allow startups to carry forward their NOLs, essentially penalizing startups for investing in innovation since they serve as assets on a company’s balance sheet. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) applauds today’s passage of the JOBS and Investor Confidence Act of 2018 in the U.S. House of Representatives by an overwhelming bipartisan vote of 406-4. The bill includes a number of provisions that will support capital formation for U.S. growth companies. These pro-innovation provisions include relief for many venture capital firms from having to become Registered Investment Advisors (RIAs), a designation that was not intended for VC firms and which adds a number of costs and challenges for VC firms. Even firms that do not have to register often need to manage their portfolio and limit or refrain from certain investments to avoid the regulatory morass of registration. (more…)
The DEAL Act Would Improve Access to Capital for U.S. Startups
WASHINGTON, DC – The National Venture Capital Association (NVCA) was pleased to see that today the U.S. House Committee on Financial Services passed the Developing and Empowering our Aspiring Leaders (DEAL) Act by a voice vote. Sponsored by Representative Trey Hollingsworth (R-IN), the DEAL Act will encourage capital formation for startups by directing the Securities and Exchange Commission (SEC) to make a percentage of secondary investments qualifying for purposes of the definition of a venture capital (VC) fund. The modification would be limited in scope to equity investment by venture capital funds, activity that is generally a bipartisan priority. This bill would improve the ability of VC funds to continue to follow their portfolio companies along their growth path through more follow-on investments without fear of triggering a significant regulatory burden. (more…)
Sustained Momentum in Venture Fundraising Continued to Fuel Strong Dealmaking Across All Stages in 2018; Exit Market Showed Signs of Improvement with IPO Count on Track to Become Second Best Year since 2000
SEATTLE, WA – Investment in 3,912 venture-backed companies reached $57.5 billion invested across 3,997 deals in the first half of 2018, according to the PitchBook-NVCA Venture Monitor, the authoritative quarterly report on venture capital activity in the entrepreneurial ecosystem jointly produced by PitchBook and the National Venture Capital Association (NVCA). At this pace, venture investment is expected to meet or exceed capital invested in 2017, which saw the highest amount of capital deployed to the entrepreneurial ecosystem since the dot com era (early 2000’s). Deal value was driven in part by investment in late-stage companies and unicorns, however, deal sizes increased across all stages. This is most notable in the angel and seed stage, which has been boosted by the emergence of pre-seed financings. These pre-seed rounds allowed for more mature business models by the time of initial seed rounds, naturally leading to larger deal sizes. Additionally, the venture exit market remained healthy in the first half of 2018 and is expected to continue improving with several unicorns poised for exits. Venture fundraising also remained strong, especially for first time fund managers with niche or regional strategies. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) filed comments today to the Department of Homeland Security (DHS) arguing against the department’s proposed rescission of the International Entrepreneur Rule (IER), which would allow for talented immigrant entrepreneurs to remain in the United States to build and scale their startups. NVCA argues in its comments that rescinding the IER program would prevent the U.S. from realizing the substantial economic and security benefits that locating new startup companies in the U.S. would provide.
“NVCA is proud to once again lead the charge to support immigrant entrepreneurs,” said Bobby Franklin, President and CEO of NVCA. “Our comments in support of the International Entrepreneur Rule reflect the incredible contributions of foreign-born entrepreneurs and how they are working in partnership with venture capitalists to solve the world’s most challenging problems, whether in technology, healthcare, science, or many other areas. In addition, our comments demonstrate that the administration relies on unsupported assertions and arguments in justifying removal of the International Entrepreneur Rule.” (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) was pleased to see that today’s proposal from the Federal Reserve to simplify the Volcker Rule includes questions on whether the rule’s exclusion of banks from investing into U.S. venture capital funds should be revised. Currently, the Volcker Rule prohibits U.S. financial institutions from investing into venture capital funds as limited partners. This has had a disproportionate impact on cities and regions with emerging entrepreneurial ecosystems—areas outside of Silicon Valley and other traditional technology centers. (more…)
WASHINGTON, DC – The National Venture Capital Association (NVCA) issued the following statement today after the Department of Homeland Security (DHS) proposed to rescind the International Entrepreneur Rule, which would allow for talented immigrant entrepreneurs to remain in the U.S. to build and scale their startups.
“The startup and venture community is very disappointed with DHS’s short-sighted decision to turn away American jobs that would be created by the International Entrepreneur Rule,” said Bobby Franklin, President and CEO of NVCA. “The facts are clear: our country needs more entrepreneurship, which is exactly what the International Entrepreneur Rule would bring. We will continue to explain to the administration why immigrant entrepreneurship benefits our country and must be supported by policymakers.” (more…)