venture capital report - dow jones & company · 1/8/2019 · venture capital report the...

V E N T U R E C A P I T A L R E P O R T

Venture Capital Report

U . S . | 1 Q | 2 0 1 9


VENTURE CAPITAL REPORT

The following report presents Dow Jones VentureSource’s quarterly findings for U.S. venture capital investment, fundraising, and liquidity. The

included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 1Q 2019 include:

• The total amount of equity investment was the third-largest on record, exceeded only by the previous two quarters.

• Deal flow declined for the third quarter in a row, something that only occurred twice before – during the 2008-2009 financial crisis, and the

bursting of the dot-com bubble. Whether this is a statistical anomaly or a harbinger of things to come remains to be seen.

• Median deal sizes surged to $7 million, the highest figure in 11 years.

• VC fundraising experienced its third-best quarter on record, and unlike the equity deal flow, the number of fund closings also remained high.

• While the M&A market had another strong quarter, the number of IPOs declined sharply for the third consecutive quarter. However, due to

Lyft’s IPO (the third-largest for any U.S. VC-backed company on record), the total amount raised at IPO increased from 4Q.

2


EQUITY FUNDING REMAINS AT HIGH LEVELS, DEAL COUNT CONTINUES TO DECLINE

The situation in 1Q presents a complicated picture. While

total equity funding fell 26% from 4Q’s record-breaking

figure, the $31.5 billion raised still ranks as the third-

highest quarterly total on record. Also, once the

anomalous $12.8 billion investment for Juul Labs is

subtracted, the most recent three quarters saw

consistent levels of funding, around $30-33 billion

apiece.

Potentially more concerning is the sustained drop in deal

flow – so far, down 23% from 2Q 2018. The 1,234 deals

recorded in 1Q is not only the lowest quarterly total since

4Q 2013, but it is also the third consecutive quarter with

a decrease in deal counts.

3

FINANCING

Equity Financings in U.S.-Based,

VC-Backed Companies (2016–2019)

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Amount Raised ($B) $16.60 $19.55 $19.70 $14.31 $19.65 $21.51 $24.14 $22.19 $27.45 $28.67 $32.57 $42.80 $31.50

Number of Deals 1346 1351 1410 1274 1476 1507 1479 1365 1598 1600 1505 1432 1234

0

200

400

600

800

1000

1200

1400

1600

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00


TOP ROUNDS FOR VC-BACKED COMPANIES (1Q 2019)

4

FINANCING

Company Name Location Industry Code Industry Segment Industry Group Brief Description Close Date Round Type Raised ($M)Round Investors

(* denotes lead)

WeWork

Companies Inc.

New York,

NY

Facilities/

Operations

Management

Business

Support Services

Business and

Financial

Services

Provider of shared

office space.1/8/2019

Corporate

Equity$4,000.00 Softbank Group Corp.

Flexport Inc.San Francisco,

CA

Logistics/

Delivery Services

Wholesale Trade

and Shipping

Business and

Financial

Services

Provider of global

logistics and import-

export concierge

services.

2/21/2019 VC 5th $1,000.00

Susa Ventures; SoftBank Vision Fund*; SF Express

Co. Ltd.; Founders Fund LLC; DST Global; Cherubic

Ventures

Verily Life

Sciences LLC

South San

Francisco,

CA

Medical Devices

and Equipment:

Other

Medical Devices

and EquipmentHealthcare

Provider of tools and

devices for gathering

and organizing

health data.

1/3/2019 VC 2nd $1,000.00Silver Lake Management LLC*; Ontario Teachers'

Pension Plan Board

Nuro Inc.

Mountain

View,

CA

AutomobilesVehicles and

Parts

Consumer

Goods

Provider of robotic

delivery vehicles.2/11/2019 VC 2nd $940.00 SoftBank Vision Fund*

Aurora

Innovation Inc.

Palo Alto,

CA

Vehicles and

Parts: Other

Vehicles and

Parts

Consumer

Goods

Developer of self-

driving car software

and hardware.

2/7/2019 VC 2nd $530.00

T. Rowe Price Group Inc.; Shell Ventures LLC; Sequoia

Capital*; Reinvent Capital; Lightspeed Venture

Partners; Index Ventures; Greylock Management

Corporation; Geodesic Capital; Amazon.com Inc.


BUSINESS SERVICES & HEALTHCARE EMERGE AS WINNERS IN 1Q

VC investors spread their attention across a wider range of sectors

than in the previous quarter. Leading the pack in terms of money

raised was the Business & Financial Services group, with $10.63

billion secured in 257 deals. WeWork and Flexport represented this

industry among the quarter’s top deals, taking first and second place

with $4 billion and $1 billion, respectively.

Healthcare companies secured the next largest share of funding,

with $6.7 billion spread across 263 deals. The top deal within this

space was for Verily Life Sciences, which received $1 billion in its

2nd round.

5

FINANCING

1Q 2019

Industry

Breakdown

By Number

of Deals

1Q 2019

Industry

Breakdown

By Amount

Raised ($B)

257

82

154

8263

40

425

Business & Financial Services

Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials

Information Technology

34%

10%

12%0.2%

21%

3%

20%

Business & Financial Services

Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials

Information Technology


MOST ACTIVE INVESTORS FOR U.S.-BASED, VC-BACKED COMPANIES (1Q 2019)

6

FINANCING

27

2322

2019 19

14

12 12 12

0

5

10

15

20

25

30

New EnterpriseAssociates

GV Alumni VenturesGroup

Norwest VenturePartners

Sequoia Capital Y Combinator Battery Ventures Alexandria VentureInvestments

Canaan Partners Founders Fund


NUMBER OF DEALS/AMOUNT RAISED BY METRO REGION (1Q 2019)

7

FINANCING

Metro Region Breakout

Number of Deals

Metro Region Breakout

Amount Raised ($B)

18

22

26

35

36

39

43

55

101

204

349

Orange County

Dallas-Fort Worth

San Diego

Austin

Potomac

Chicago

Seattle

Los Angeles

Boston

New York

San Francisco Bay Area

Number of Deals by Metro Region

$0.27

$0.27

$0.31

$0.39

$0.43

$0.47

$0.81

$1.23

$2.60

$7.68

$13.88

San Diego

Orange County

Dallas-Fort Worth

Chicago

Potomac

Seattle

Austin

Los Angeles

Boston

New York

San Francisco Bay Area

Amount Raised ($B) by Metro Region


NUMBER OF DEALS/AMOUNT RAISED BY PRIMARY REGION (1Q 2019)

8

FINANCING

Number of

Deals in 1Q

2019

by Primary

Region

Amount Raised

($B) in 1Q

2019

by Primary

Region

Number of Deals

by Primary Region

1Q 2019

296

22

94

57

115

353

55

71

65

103

Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California

Amount Raised ($B)

by Primary Region

1Q 2019

$8.73

$0.30

$0.64

$0.66

$2.68

$13.90

$0.61

$1.27

$0.69

$2.02

28%

1%2%

2%

9%44%

2%4%

2%6%

Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California

24%

2%

8%

5%

9%29%

4%

6%

5%8%

Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California


MEDIAN DEAL SIZE FOR EQUITY FINANCINGS IN U.S. COMPANIES

9

FINANCING

Median Equity Deal Size ($M)

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Median Equity Deal Size ($M) $4.08 $4.00 $4.10 $4.18 $4.50 $5.00 $4.85 $5.30 $5.29 $6.40 $5.60 $6.40 $7.00

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00


Number of Deals

COUNT OF EQUITY FINANCINGS IN U.S. COMPANIES, BY ROUND CLASS

1 0

FINANCING

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Seed 126 102 124 124 157 182 170 156 172 193 177 130 84

First 365 370 381 350 353 374 307 283 346 389 309 343 299

Second 226 239 213 195 229 208 234 191 243 229 218 177 204

Later 422 413 459 374 443 401 414 401 477 454 450 432 376

Restart 4 4 4 1 6 2 4 0 2 0 4 0 2

0

50

100

150

200

250

300

350

400

450

500


Amount Raised ($B)

AMOUNT RAISED IN U.S. COMPANIES, BY ROUND CLASS

1 1

FINANCING

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Seed $0.22 $0.19 $0.17 $0.24 $0.29 $0.43 $0.39 $0.39 $0.45 $0.52 $0.55 $0.46 $0.24

First $2.29 $2.40 $3.24 $2.27 $3.52 $3.40 $2.30 $3.63 $4.54 $4.27 $4.87 $4.97 $3.08

Second $2.24 $2.89 $2.48 $2.09 $4.09 $3.07 $3.95 $3.18 $4.88 $3.64 $5.00 $3.11 $7.48

Later $10.22 $9.46 $11.56 $7.59 $10.09 $12.50 $14.64 $12.85 $14.95 $17.23 $17.71 $17.38 $13.82

Restart $0.06 $0.04 $0.55 $0.01 $0.08 $0.06 $0.04 $0.00 $0.03 $0.00 $0.04 $0.00 $0.02

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00


U.S. FUNDRAISING REMAINS STRONG IN 1Q

1 2

FUNDRAISING

U.S. VC Fundraising (2016–2019)

Based on multiple closingsAmerican VC fundraising started 2019 with a bang,

raising $15.46 billion across 141 closings in 1Q. While

the amount raised was down 8% from the previous

quarter, this figure is still very high by historical

standards. In fact, it’s the third-largest amount raised on

a quarterly basis since 2000, with the top two occurring

in 2Q and 4Q last year.

The total number of VC fund closings in 1Q was roughly

the same as the previous quarter, and close to the

quarterly average for the past three years.

Menlo Park-based Technology Crossover Ventures

raised the largest fund of the quarter, collecting $3

billion for its tenth fund. This single fund represented

nearly 20% of the total for 1Q.1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Amount Raised ($B) $14.35$11.91 $8.94 $9.68 $8.20 $14.43 $9.91 $5.70 $8.91 $16.62$13.15$16.83$15.46

Number of Funds 132 119 119 151 175 163 122 146 146 163 151 139 141

0

40

80

120

160

200

$-

$4.00

$8.00

$12.00

$16.00

$20.00


TOP U.S. VC FUND CLOSINGS IN 1Q 2019

1 3

FUNDRAISING

Firm Name Fund Name

Amount

($M) Closed

in 1Q

Location Offering Status Fund Type Closing Type

Technology Crossover VenturesTechnology Crossover Ventures

X LP$3,000.00 Menlo Park, CA Closed

Late-Stage Venture

CapitalFinal

Accel Partners Accel Growth Fund V $1,500.00 Palo Alto, CA ClosedLate-Stage Venture

CapitalFinal

Riverwood Capital LLC Riverwood Capital Partner III LP $1,002.53 Menlo Park, CA OpenMulti-Stage Venture

CapitalFirst

Flagship PioneeringFlagship Pioneering Special

Opportunities Fund II LP$824.00 Cambridge, MA Closed

Multi-Stage Venture

CapitalFinal

Kleiner Perkins Caufield & ByersKleiner Perkins Caufield & Byers

XVIII LLC$600.00 Menlo Park, CA Closed

Early-Stage Venture

Capital Final


VC INVESTORS ENJOY ANOTHER QUARTER OF RELATIVE STABILITY IN LIQUIDITY MARKETS

With 183 exits, overall activity in the liquidity markets

in 1Q was fairly consistent with the quarterly figures

over the past three years, thanks largely to the

stability of M&A’s. By contrast, the IPO market has

been in a cooling trend for the past three quarters.

1 4

LIQUIDITY

Exit Opportunities for U.S. VC–Backed Companies (2016–2019)

0 50 100 150 200

1Q'16

2Q'16

3Q'16

4Q'16

1Q'17

2Q'17

3Q'17

4Q'17

1Q'18

2Q'18

3Q'18

4Q'18

1Q'19

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

IPOs 6 11 14 10 7 21 7 25 16 30 22 14 10

M&As 155 164 173 163 169 159 173 176 174 181 176 191 173


M&A SHOWS CONTINUED STRENGTH GOING INTO 2019

Unlike the IPO market, M&A’s are a picture of

remarkable stability, with yet another quarter of

strong activity. Although both total deals and dollars

raised were down moderately from 4Q, with $30.66

billion paid across 173 transactions, these figures

are roughly average compared to the quarterly totals

of the past three years.

The largest deal of the quarter was

Johnson & Johnson’s acquisition of Auris Health for

$3.4 billion.

1 5

LIQUIDITY

U.S. VC-Backed M&A Activity (2016–2019)

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Amount Paid ($B) $26.92 $27.10 $36.40 $31.30 $23.01 $19.90 $20.64 $25.83 $29.56 $36.14 $28.08 $36.41 $30.66

Number of M&As 155 164 173 163 169 159 173 176 174 181 176 191 173

0

50

100

150

200

250

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00


TOP U.S. VC-BACKED M&As IN 1Q 2019

1 6

LIQUIDITY

Company

Name Location Brief Description Industry Code Industry Segment Industry Group

Close

Date

Amount

Paid ($M)Acquirer

Auris Health Inc.Redwood City,

CA

Developer of robotic

technologies used in

bronchoscopic procedures.

Surgical DevicesMedical Devices and

EquipmentHealthcare 2/13/2019 $3,400.00 Johnson & Johnson Inc.

NGINX Inc.San Francisco,

CA

Provider of an open-source

platform to develop and deliver

applications.

Software

Development

Tools

SoftwareInformation

Technology3/11/2019 $670.00 F5 Networks Inc.

Webroot Inc.Broomfield,

CO

Provider of AI solutions to

protect businesses and

individuals against cyber

threats.

Network/Systems

Management

Software

SoftwareInformation

Technology2/7/2019 $618.50 Carbonite Inc.

Demisto Inc.Cupertino,

CA

Provider of a SOP that

combines security orchestration

with incident management.

Network/Systems

Management

Software

SoftwareInformation

Technology2/19/2019 $560.00 Palo Alto Networks Inc.

Hotel Tonight Inc.*San Francisco,

CA

Provider of a mobile application

for last-minute hotel bookings.

Shopping

Facilitators

Consumer

Information Services

Consumer

Services3/7/2019 $465.00 Airbnb Inc.

*Deal pending regulatory approval


LYFT’S DEBUT MASKS WEAKNESS IN IPO MARKET

The U.S. IPO market put on an erratic display in 1Q,

with the number of offerings down sharply from the

highs seen in 2018, while simultaneously recording

a steep increase in the total amount raised. This

was due to the long-awaited IPO for Lyft, which

secured $2.34 billion at a valuation of $21.09 billion.

Without the Lyft IPO, the amount raised would have

been the weakest since 3Q 2017.

Lyft’s offering ranks as the third-largest IPO on

record for U.S. VC-backed companies, after

Facebook in 2012 and Snap in 2017.

1 7

LIQUIDITY

U.S. VC-Backed IPO Activity (2016–2019)

1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19

Raised ($B) through IPO $0.38 $0.79 $1.07 $0.94 $3.95 $2.35 $0.58 $3.10 $1.75 $4.69 $2.32 $2.40 $3.34

Number of IPOs 6 11 14 10 7 21 7 25 16 30 22 14 10

0

5

10

15

20

25

30

35

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00


TOP U.S. VC-BACKED IPOs IN 1Q 2019

1 8

LIQUIDITY

Company

Name Location

Brief

Description

Industry

CodeIndustry Segment

Industry

Group

Close

Date

Raised through

IPO ($M)Exchange

Lyft Inc.San Francisco,

CA

Operator of an on-demand

ride-sharing service platform.

Transportation

ServicesTravel and Leisure

Consumer

Services3/29/2019 $2,340.00

Nasdaq:

LYFT

Gossamer Bio Inc.San Diego,

CA

Developer of immunology,

anti-inflammatory, and cancer

therapeutics.

Biotechnology

TherapeuticsBiopharmaceuticals Healthcare 2/8/2019 $276.00

Nasdaq:

GOSS

Alector Inc.

South San

Francisco,

CA

Developer of therapeutic

technologies for

neurodegenerative disorders.

Biotechnology


Nasdaq:

ALEC

Precision

BioSciences Inc.

Durham,

NC

Provider of genome editing

services.

Biotechnology


Nasdaq:

DTIL

Shockwave

Medical Inc.

Santa Clara,

CA

Developer of balloon dilatation

catheters.Surgical Devices

Medical Devices and

EquipmentHealthcare 3/7/2019 $96.90

Nasdaq:

SWAV


ABOUT US

Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers, and service providers find deal and

partnership opportunities, perform comprehensive due diligence, and examine trends in venture capital investment, fundraising, and liquidity. It

provides accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry, and

stage of development throughout the world.

The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in

VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources.

These venture capital statistics cover institutional equity investments in early stage, innovative companies and do not include companies receiving

funding solely from corporate, individual, and/or government investors. Figures contained throughout the report are current at the time of publication

but are subject to change without notice.

No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.

1 9


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venture capital report - dow jones & company · 1/8/2019 · venture capital report the...

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