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Venture capital booming — and entrenching

October 15, 2020

The venture capital (VC) market appears to be another part of the American economy experiencing a "K-shaped" recovery, with some participants achieving new highs as others are ignored altogether. The PitchBook-NVCA Venture Monitor Q3 2020 shows that the number of VC investments is on track to meet last year’s total (when estimated deals are included, as the report for the first time acknowledges the tendency to systematically miss more recent deals), while deal value is on track for the highest total ever recorded. Similarly, VC firms in total have raised more through Q3 2020 ($56.6 billion) than in all of 2019 ($54.9 billion).

This overall success is accruing predominantly to existing VC participants. Startups receiving their first investments have dropped to a historic low at less than a quarter of all deals, and firms raising their first funds account for just 3.3 percent of all capital raised (half of the previous record, set in 2008). Black entrepreneurs may again be among those left out of the market’s success, as a recent analysis of Crunchbase’s Q3 2020 data found that just 37 black entrepreneurs closed VC deals in the quarter (out of more than 1,300 VC deals identified).