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Venture Capital Investing Soared to a Record in 2018
Corporations and private equity firms are increasingly investing in late-stage venture deals, according to PitchBook.
Venture capital invested last year topped $100 billion for the first time since the dot-com boom, new research shows.
Firms invested a record $130.9 billion across 8,948 venture capital deals in the U.S. last year, exceeding the more than the $105 billion deployed in 2000, according to a report this week from PitchBook and the National Venture Capital Association. The biggest deal was e-cigarette maker Juul Labs' $12.8 billion of late-stage funding, though the industry would have been at a near-record level without it.
The market tended to focus on transactions that were larger than $50 million as angel- and seed-focused investing — which involve smaller checks than late-stage funding — saw a "sharp decline" in deals, according to the report. The industry got a boost from companies and private equity firms, with each group doing a decade-high worth of deals.
“These two investor groups are also some of the most heavily involved in large, late-stage venture deals,” PitchBook and NVCA said in the report. They added that companies and private equity firms “would likely be some of the initial groups to pull back, given the non-core nature that VC deals represent to them.”
About 62 percent of VC capital invested last year involved deals of at least $50 million, with late-stage deals representing an “outsized proportion” of total capital invested, according to the report. For example, Tobacco company Altria Group said in December that it invested $12.8 billion in Juul to accelerate its mission to switch adult smokers to e-vapor products.
Corporations invested $66.8 billion in 1,443 VC deals in 2018, while private equity firms participated in 792 deals for a total investment of $38.5 billion, according to the report.