Venture Investors Started 2020 with $444 Billion in Assets to Deploy to Promising Startups
FOR IMMEDIATE RELEASE
March 17, 2020
Contact: Cassie Ann Hodges
WASHINGTON, DC – The U.S. venture ecosystem ended 2019 with more than 10,400 companies across the country receiving venture funding, approximately 1,300 venture firms managing over 2,200 active venture funds, and more than $444 billion in venture capital (VC) assets under management (AUM), according to the National Venture Capital Association (NVCA) 2020 Yearbook, with data provided by PitchBook, released today. The NVCA 2020 Yearbook is an annual publication documenting trends and analysis of venture capital activity in the U.S. from the past year and capturing historical data and information about venture’s role in fueling entrepreneurship in America.
In 2019, U.S. venture-backed startups represented approximately 2.27 million employees. The 10,430 high-growth startups that raised capital last year to build and grow their companies hailed from all 50 states and the District of Columbia, 242 Metropolitan Statistical Areas (MSAs), and 397 Congressional Districts. Total capital invested in the U.S. last year reached $133 billion and buoyed global total venture capital investment to $257 billion. The U.S. share of global venture investment has held steady around 50% the past four years—52% in 2019—well below the 84% global share in 2004 and 90%+ share in the 1990s.
“The venture ecosystem has seen incredible growth over the last decade, which has enabled U.S. entrepreneurs to build the next big thing across industries that have transformed the way we live and work and made life changing healthcare technologies a reality,” said Bobby Franklin, President and CEO of NVCA. “As we turn the page on a new decade, uncertainty looms around the public and economic health of the country, including how COVID-19 will impact the startup ecosystem. History shows us the resilience of the industry through market downturns, when some of the most successful startups were founded. Startups are also poised to offer solutions to the increasing and changing needs communities and health systems are facing. Venture investors with ample dry powder are well positioned to fund promising startups; however, it remains a critical time for U.S. public policy to encourage new company formation and factor in the needs of high-growth startups.”
Highlights of the U.S. Venture Industry in 2019
- Venture-backed exit activity was the big story for VC in 2019, a record year for exit value following a buildup of large, late-stage companies in the private markets.
- The 82 venture-backed IPOs representing $199 billion in exit value in 2019 marked the highest annual exit value on record.
- Mergers and acquisitions (M&As) remained strong in the second half of the decade, with six straight years of $40 billion+ in disclosed exit value. In 2019, 836 M&As (219 with disclosed values) represented a total of $61.4 billion in disclosed exit value, a 6% decrease year-over-year.
- 10,430 venture-backed companies received $133 billion in funding in 2019, the second consecutive year more than $130 billion has been invested.
- The number of angel/seed VC investments in 2019 remained steady compared to 2018, with 4,760 deals completed, representing 42% of total deals in 2019.
- 2,729 companies raised first-time funding and attracted $11.3 billion, the second highest annual amount of capital invested on record.
- The 237 mega-deals (i.e., investments of $100 million+ into venture-backed companies) recorded in 2019 is the highest annual deal count on record and accounted for nearly half (40%) of total capital invested in 2019.
- The life sciences sector saw more than $22 billion invested across 1,487 companies in 2019, accounting for 17% of total capital invested and 14% of total deal count last year.
- Venture capital investors raised $51 billion across 272 funds to deploy into promising startups, marking the fifth consecutive year of $35 billion or more raised.
- The overall US median VC fund size in 2019 was $80 million, the highest since 2008 and a 7% increase from 2018.
- The $444 billion in U.S. VC assets under management at the end of 2019 included $120 billion in dry powder.
- Startups that were venture-backed in 2019 represented approximately 2.27 million employees.
Venture Across the Country
- VC funds based in 26 states and the District of Columbia held final closes on venture funds in 2019, with Connecticut, Ohio, Illinois, the District of Columbia, Georgia, and Michigan seeing the biggest year-over-year absolute gains.
- Outside of California, Massachusetts, and New York, median VC fund size reached $43 million in 2019, an increase of 57% compared to 2018, but still relatively small to the dominant venture hubs—the median for California, Massachusetts, and New York, collectively, was $100 million.
- Venture funding reached startups in all 50 states and the District of Columbia, 242 Metropolitan Statistical Areas (MSAs), and 397 Congressional Districts.
- Buffalo, NY, Boise City, ID, and Richmond, VA saw the biggest growth rate for annual number of VC investments over the past five years (for those MSAs with at least 15 in 2019).
- Bend, OR, Rochester, NY, and Grand Rapids, MI saw the largest annual growth for VC investment over the past five years (for those MSAs with at least $10 million VC investment in 2014 and 2019).
NVCA in Action in 2019
- NVCA and Startup@BerkeleyLaw at the University of California, Berkeley, School of Law, launched VC University, which democratizes access to education on venture capital for entrepreneurs, investors, attorneys, or anyone else interested in emerging company finance across the country.
- NVCA released the second edition of the NVCA-Deloitte Human Capital Survey, which found that VC firms are beginning to make some important—albeit small—gains in implementing strategies to attract and retain top diverse talent.
- NVCA helped the venture industry navigate the CFIUS Pilot Program that put many of FIRRMA’s authorities in place. NVCA engaged deeply with the Treasury Department and other CFIUS agencies as the final rules implementing FIRRMA were put in place.
- NVCA and The Exponential Center at the Computer History Museum announced a new partnership to preserve and make freely accessible the NVCA Oral History Collection, a rich set of transcripts of 17 venture industry luminaries that have been compiled over the past fifteen years by NVCA.
- NVCA convened 60 emerging VC fund managers from historically underrepresented groups in Washington, DC and Los Angeles at LP Office Hours to learn fundraising best practices and how to manage the GP-LP relationship with one-on-one meetings with 20 LPs and 8 experienced VCs.
The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the US venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about NVCA, please visit www.nvca.org.