As the size of the seed deal increases, the number of non-traditional investment vehicles increases, and the size of companies moving towards the public sector continues, the venture capital industry continues to develop.
How will it change in 2019? Analysts from the PitchBook investment data firm presented six forecasts of how the VC climate is shifting from current levels. Read on to see the six forecasts, plus a benchmark for the company's 2018 forecast.
- Subscription ratio of total exit value VC reaches new contract high: There were 138 Unicorns in the United States, or companies valued at more than $ 1 billion, up to August 1, which is five times higher than in 2011. As these companies age, "the need for liquidity is paid", PitchBook noted Predictions. . Uber, Lyft, Airbnb, Palantir, Pinterest, Slack, Postmates, CrowdStrike and Zoom are some of the reports announced in 2019. This will be followed by 2018, which saw more than 80 VC-supported public offerings, the highest level since 2014.
- New VC participants continue to reproduce: Strong VC returns and high valuations have opened the door to non-traditional investors who differentiate by finding "innovative ways to support attractive business" such as avoiding the typical VC management fees. The value of deals with non-traditional investor participation reached $ 69.4 billion at 1,667 deals in 2018. "The large pensions, endowments, institutions, sovereign wealth funds and family offices are among some of the major groups we are seeing increasing activity. Says the report.
- The average assessment steps in the early phase will reach 2X in 2019: Early mid-term evaluations have increased over the past decade, and average evaluations have increased in the early-middle stage over the past two years. "Increase in age [startups] Initially, fundraising activities and increased competition for investors are raising upward pressure on valuations, especially at an early stage [startups] Begin to accelerate growth, "PitchBook said.
- The size of the average owners 'and seeds' deal will continue to rise: The size of the average owners' seed package has increased from $ 500,000 in 2012 to $ 1.2 million in 2018 while the average life of companies in this financing phase has almost doubled. "We see no reason in the average age of owners and seeds [VC-backed startups] Will not continue to rise with the expansion of access to incubators, speeds and business resources, and with investors' expectations [VC-backed startup] "Maturity continues to grow," the report says. "These factors combined with high levels of dry powder available across the project ecosystem are creating double forces to increase the attractiveness of early stage projects and increase the pressure and competition between venture capital funds VC."
- Growth in average fund size slows: The medium-sized enterprise fund has averaged about $ 40 to $ 50 million over the past five years, but has risen to $ 80 million this year. PitchBook expects the fund sizes to reach "the maximum, as GPs refrain from raising excess capital to maintain venture-like returns." Large capital groups have proved to be a competitive advantage for some funds, as non-traditional investors like SoftBank are coming into effect. "However, we emphasize that, given the recent inflationary dynamics in the enterprise markets, the larger funds may make it difficult in the end to offer returns that are like adventure to investors," the report notes.
- Banks again more institutional blockchain solutions: While the empty currency may be overpriced, there have been many pilot programs run by Nasdaq, the Australian Securities, Depository and Clearing Depository Foundation, and others are testing blockchain technology in capital markets. There were 43 bank investors involved in VC and equity investment in 2018, up from seven in 2017. "Given the operational efficiencies that can be achieved with institutional blockchain solutions, we expect more strategic investments from potential beneficiaries such as the report suggests that banks Financial institutions next year, measured by the number of blockchain rounds with the participation of banks.
Here are the forecasts for 2018 and how Pitchbook has evaluated itself:
- VC evaluations will continue to be tiered – Split, rip
- The alternative will become a lesser alternative – Human
- The average size of the Fund will continue to grow – Human
- Increased investment activity in California-based entrepreneurship centers – Split, rip
- The Unicorn will reach the exits, with some of the stories – Split, rip
- Net cash flows to LPs will continue to be positive as exit values get a boost – Human
- Initial currency offers (ICOs) will become more institutional – Failure
- Fintech will accelerate the consolidation – Split, rip