We just received Dow Jones VC Edge report for Q1 2019. The data is excellent and shows the data behind trends in venture capital. What are the trends? i) the market has never been more awash with venture capital; but ii) the number of deals being done isn’t growing at the same rate. As a result, the average deal size has ballooned with more attention being paid to later rounds than earlier rounds. The data and commentary are below.
Dollars invested are way up. In the past 12 months, venture firms have invested $136 billion in US deals, which is up YOY by a whopping 42%. As you can see, 2018 is when the dollar volume of deals really picked up: from Q2 2015 to Q4 2017, the 12 month moving average was $81 billion, whereas from Q1 2018 to Q1 2019, the 12 month moving average was $115 billion.
Number of deals are barely increasing. Over the past 12 months, there were 5,771 venture deals done in the US. That’s actually down 3% year over year. Unlike dollars invested, the number of deals has never increased by more than 10% year over year. The moving average of the past 4 quarters is only a 4% year over year increase.
Deal size is way up. Given that dollars invested has increased rapidly (42% YOY), but the number of deals done is relatively flat (-3% YOY), average deal size is now $26mm. Note that from Q3 2014 to Q4 2018, average deal size each quarter was relatively consistent, averaging $15mm each quarter with a range of $11mm to $19mm.
Where is the cash going? In Q1 2019, San Francisco received 44% of the investment, NYC received 24%, Boston received 8%, and Los Angeles got 4%. The remaining 20% went to the rest of the country.
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