What Happened to the ‘Venture’ in Venture Capital?

Two-thirds of all VC financing went to mega deals in the first quarter of 2019.

Illustration by II

Illustration by II

Venture capital funds are throwing more and more capital to finance a shrinking number of deals, according to data from PitchBook and the National Venture Capital Association. Deal sizes are beginning to rival mainstream private equity transactions.

The two organizations reported that VCs invested $32.6 billion during the first three months of 2019 — the second-highest amount over the last decade, second only to the record-breaking $44.15 billion deployed in the last quarter of 2018.

That $32.6 billion financed 1,853 deals — the lowest number in any quarter since the last three months of 2011, according to PitchBook and the NVCA.

This combination of higher capital flows and lower transaction numbers meant larger deal sizes across the board. The average angel and seed deal finalized in the first quarter was worth $2.3 million, early-stage VC deals averaged $20.8 million, and late-stage VC investments hit $41.7 million each on average.

“Investors continue writing larger checks to more developed startups,” John Gabbert, PitchBook’s founder and CEO, said in a statement. “There are several highly anticipated technology IPOs around the corner, and it will be vital to watch how private market valuations translate to the public markets.”

[II Deep Dive: Venture Capital Investing Soared to a Record in 2018]


According to the PitchBook and NVCA report, so-called mega deals drew most of the late-stage VC funding during the first quarter. Just 52 deals accounted for 61.8 percent of total late-stage deal value, or $17 billion.

Overall, $50 million-plus transactions accounted for 122 of all first-quarter deals, or about 6.6 percent of the total. But these weighty deals sucked up $21.58 billion in VC investment — two-thirds of all capital deployed in the three-month period.

Meanwhile, fundraising by venture capital firms has slowed after record-breaking commitments from limited partners last year. PitchBook and the NVCA said VC firms raised $9.6 billion across 37 vehicles during the first quarter of 2019, and pulled in $53.9 billion for all of 2018.

However, the first quarter saw five “mega” funds close, led by Technology Crossover Ventures’ $3 billion vehicle. Overall, these five $500 million-plus funds accounted for $5.35 billion, or nearly 56 percent of the fundraising total.