VC market: Q3 drops from 2018, still on pace for huge year

PitchBook and NVCA just released the 3^rd quarter Venture Monitor, and the year-to-date figures show another year of robust activity. Total deal value is set to exceed $100 billion again, and exit value is already at $227 billion. Deal and exit count, however, appear on pace to finish below the last several years, with 7,862 investments and 633 exits to date so far. The report shows continued, challenging trends for early investments, with 55 percent of seed deals now over $1 million and first financings on pace for a slower year by both investments and value.

Several sections of the report speak to contextual challenges and uncertainty likely to face the venture capital market, including well-publicized IPO disappointments and the general threat of a looming recession. Despite — or, perhaps, because of — these concerns, the report’s interview with an executive from sponsor Perkins Cole is remarkably upbeat. The company does not believe valuations are “unexpectedly high” despite an internal “joke about how $10 million is the new $4 million.” The executive also notes that the amount of dry powder is “still helping support valuations” despite the losses by some high-profile unicorns.

The Venture Monitor includes tracking of investments for companies with female founders. The data suggest that while more money and deals are supporting these companies — $13.6 billion through 1,556 deals so far in 2019, these investments are keeping pace with the growing VC market, rather than making significant inroads toward equality.

The Bay area appears on track to lose market share in 2019. New York City is seeing its portion of deal value increase relative to last year. For the number of investments, “other” metros are seeing slightly more activity, on a percentage basis, than a year ago.