Are We on Track for a $100 Billion in VC Investment for 2018?
EisnerAmper Director of Capital Markets Alan Wink examines VC investment for the third quarter of 2018, along with some possible heavyweight IPOs for 2019. Alan also shares that VC investment thus far for 2018 has been red hot. But does he think the total for the year will surpass $100 billion?
Dave Plaskow: Hello and welcome to the EisnerAmper podcast series. We're always interested in the latest trends and developments, as well as any related business and accounting opportunities and challenges. Today we're taking a look at the venture capital landscape for the third quarter of 2018. I'm your host, Dave Plaskow, and with us today is Alan Wink, a director for EisnerAmper Capital Markets. Alan, welcome and thanks for being here.
Alan Wink: Good morning, Dave.
DP: Alan, you had mentioned a rather eye-opening statistic earlier, why don't you share that with our listeners.
AW: What's really amazing is that the VC market continues to be really, really frothy. For the first nine months of the year, more venture capital dollars were invested than the entire year of 2017. We're probably going to see a $100 billion VC investment year in 2018—probably the first time since the dot com boom of 2000.
DP: Wow. So what's fueling all of that growth?
AW:A tremendous amount of money in the system. VCs are still sitting on a lot of dry powder. Companies continue to raise large pools of private capital rather than going public. In Q3, there were 12 deals in excess of $300 million. In fact, two of those deals were in excess of $500 million.
DP: Where are some of these larger deals? Which sectors are we talking about?
AW:Autonomous vehicles and urban mobility are really the areas that are driving a lot of the VC dollars today.
DP: Any notable IPOs being mentioned for 2019?
AW:I think 2019 might be the year of the IPO. A lot of companies that continue to raise large pools of private capital prior to 2019 are going to go into the private markets and take advantage of some robust stock prices, even though stock prices have been climbing the last couple of weeks. There’s also a chance to create some liquidity for their stockholders and their employees. You're going to see companies like Uber, Airbnb and Pinterest, to name a few, which are projected to go public.
DP: Those are definitely some heavyweights. I think you alluded to this earlier. Give me the over under for the VC market for all of 2018.
AW: The robust market will continue into Q4, with $84 billion invested into the first three quarters of the year. It's almost a slam dunk that $100 billion will be exceeded this year.
DP: Give us a look ahead to 2019. What are you looking at there? What are you keeping your eyes open for?
AW:I think ‘19 is going to be a really interesting year. You're going to see a decline in the number of large private deals and a dramatic increase in IPO activity. As I said earlier, it might be the best year for IPO dollars since 2000.
DP: Well, you definitely have your finger on the pulse of this. So, thanks Alan for your insight. And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics, and join us for our next EisnerAmper podcast, where we get down to business.
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