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Venture-backed exits set record for first half of year

July 18, 2019

Several mega-deal IPOs, including Uber, Zoom and Pinterest, and strong merger and acquisition activity, combined to create a record-setting $188.5 billion in venture-backed exit value for the first half of 2019, according to VentureMonitor, the quarterly report on venture capital investment compiled by the National Venture Capital Association and PitchBook. According to the report, the six-month total for 2019 has already topped the full-year total for all prior years. And, the second-quarter total of $138.3 billion is more than any other full year in the past decade.

“Before 2Q, the highest VC-backed exit value of any quarter in the past five years was the $50.1 billion mark logged in 1Q 2019. Prior to that, you have to go back to the $48 billion recorded in 4Q 2014,” according to a PitchBook web article.

The authors argue this could lead to increased investment in startups.

“With so many VC-backed companies staying private for longer and with gains consequently staying primarily on paper, some LPs (limited partners) tapped out their allocation to venture,” the report stated. “Recent gains flowing back to LPs will allow them to reinvest in venture, so the dip in venture fundraising observed early in 2019 is likely transient and not indicative of declining LP interest in asset class.”

Uber led the way, as the ride-sharing company’s IPO in May accounted for about 59 percent of the venture-backed exit value in the second quarter. This was one of 123 mega-deals, which are companies that receive $100 million or more in funding. There were 208 mega deals in 2018, which broke the previous record of 109 set in 2015, according to VentureMonitor.

Total VC investment in 2018 was $130.9 billion, which was the first time since the dot.com boom of 2000 that it has surpassed $100 billion. VCs invested about $66 billion in the first half of this year, according to Venture Monitor.

The report also stated that the 2019 VC total is “unlikely” to surpass the 2018 total, but “is still on track to post the second-highest year on record.” The report also found that investment in life sciences companies as a percentage of total VC investment “could reach the highest level since 2011, indicating the growing strength of the sector within the venture industry.”

Another positive trend was an increase in VC activity in female-owned companies, with 2019 on pace for a record year of VC invested into female-founded businesses. In just the first half of the year, the report found $1.9 billion invested in 301 deals, compared to all of 2018, which had $3.1 billion in 536 deals.

venture capital