Q1 2019 Gets the Year Off to a Great Start

 A Quarterly Wink and a Glance at Venture Capital

After a record-setting year for VC investment in 2018, Q1 2019 got the year off to a solid start and showed no indication of a slowdown. A total of $32.6B of venture capital was invested in Q1, and this represented the second highest quarterly total over the last decade. The only quarter that exceeded the Q1 total happened to be Q4 of 2018. So I suppose the naysayers can argue that VC investment was actually trending down from the previous quarter.

Mega Rounds Continue To Be the Norm

The trend of fewer but larger deals certainly continued in Q1 of 2019. While deal numbers declined, the amount of larger deals rose. In fact, there were 46 funding rounds larger than $100M in Q1. Even though capital has never been so readily accessible, seed-stage deals continued to fall in Q1. These deals as a percentage of total VC deal activity continue to decline, representing only 24% of all deals in Q1.

Lyft Leads the Way for a Robust IPO Year

Many VC-backed unicorns are expected to go public in 2019. Presently, there are actually 20 VC-backed companies in IPO registration. This expected high level of IPO activity should allow many VCs and their LPs to see enormous amounts of liquidity, which should also have a positive impact on fundraising for the foreseeable future.

Corporate Venture Capital Continues To Fuel the VC Ecosystem

Corporate VC funds invested $19.4B in Q1 in 316 venture deals. This represented almost 60% of deal volume in Q1. Corporate venture capital investment has been on the rise over the past six years, and they are taking part in larger rounds at more mature stages. In fact, more than 40% of corporate venture capital deals in Q1 exceeded $25M.

Outlook

I don’t see a slowdown in VC investment in the near future. Why? Simply look at the large amounts of capital waiting to be invested, predictions of a robust IPO market creating additional liquidity for investors, and entrepreneurs continuing to build great and innovative companies. At this writing, Lyft’s shares were trading at 22% below its IPO price, and questions are being asked about the valuations of companies that have raised large sums of capital in the private markets. Keep your eye on IPO activity and valuations over the next couple of months; it’s sure to get very interesting.