The Venture Capitalists Forging Ahead

General Catalyst, Insight Partners, and F-Prime Capital stepped up dealmaking as competitors hung back, according to PitchBook.

Ian Sigalow, co-founder of Greycroft. (Christopher Goodney/Bloomberg)

Ian Sigalow, co-founder of Greycroft.

(Christopher Goodney/Bloomberg)

A small group of venture capital firms have ramped up investing this year, even as the Covid-19 pandemic dampened dealmaking for many large U.S. VC firms, according to PitchBook.

F-Prime Capital and General Catalyst had the biggest jump in investing pace versus the first half of last year, a report Monday from the private-markets data provider showed. SOSV, Greycroft, and Insight Partners, which focuses on software, also accelerated activities during the first half of 2020.

“The software sector displayed resilience in ’08 and ’09, and now, with the highest unemployment since the Great Depression, software is still showing strong signs of resilience and even growth in some areas” Insight managing director Deven Parekh said in an emailed statement to Institutional Investor. “Covid-19 has been an unprecedented test of the resiliency of every business and every business model, and while some companies were certainly impacted, we did not see as dramatic an impact on the sector as we were preparing for.”

As it turned out, Insight didn’t need to change its investment strategy much in the pandemic, keeping its “energy on companies and categories that are clearly having tailwinds in the current environment,” according to Parekh. He said “the changes we’re seeing in the economy and in the software industry are going to outlive Covid-19, like the increased access to telehealth and remote work technologies.”

While most VC firms have pulled back on dealmaking, large investments may still thrive this year and fundraising remains robust, according to a separate report from PitchBook updating its pre-pandemic 2020 predictions.


[II Deep Dive: Hedge Funds, Family Offices Fuel Surge in Mega VC Deals]

The firm’s analysts had forecast record mega-deal activity in the VC industry. Such large deals of more than $100 million are being done at a “quite surprising” pace following the economic shock from the Covid-19 crisis, the analyst said in their midyear report.

While experienced VC fund managers — or general partners often referred to as GPs — have seen “healthy” fundraising this year, the analysts said micro-sized investment pools below $50 million have had a tougher time in the pandemic.

“The pandemic has brought some more capital scarcity to the VC environment for the first time in many years, forcing some GPs’ hands in terms of which portfolio companies they are able to continue supporting,” the PitchBook analysts said in the midyear update. “This has potentially buoyed late-stage deal activity, and particularly mega-deal activity, as investors see these companies as their “winners” that they need to return the fund.”

A spokesperson for F-Prime, which focuses on technology and healthcare deals, did not immediately provide comment on the firm’s increased activity this year. General Catalyst, Greycroft, and SOSV did not respond to requests for comment.