VC market on pace for strongest year since 2000
Venture capitalists have invested US$58bil in startups so far this year
SAN FRANCISCO: Venture capitalists are spending cash at levels not seen since the dot-com era, and they’re raising money at a pace to match.
Last quarter, VCs spent US$27.3bil in the US, according to a report set for publication Tuesday by research firm PitchBook and the National Venture Capital Association, a trade group.
That’s the most in any second quarter since the group began tracking quarterly data more than a decade ago.
Combined with a record-setting first quarter, the VC market had its strongest firsthalf-year performance since 2000.
The US$57.5bil invested in startups so far this year has already surpassed the full-year total for six of the past 10 years.
This year is on track to exceed the US$81.9bil invested last year, which was itself a record since the dot-com boom. VCs have no shortage of cash to invest. Venture funds raised US$10.8bil last quarter. That doesn’t include a stockpile raised by SoftBank Group Corp.
The Japanese conglomerate, which is looking to spend US$100bil in the technology business, is a driving force behind the VC fund-raising frenzy.
Competition from SoftBank’s Vision Fund is helping inspire long-established venture firms to raise larger funds.
Last quarter, those included Foresite Capital’s US$668mil healthcare fund and Meritech Capital’s US$630mil fund – both were much larger than the firms’ previous funds. Sequoia Capital is raising US$8bil across several vehicles, but its efforts aren’t reflected in last quarter’s data because it hasn’t completed the fund-raising.
“Many of these funds are taking an approach similar to SoftBank’s Vision Fund, adopting a meta view and attempting to capitalise on mega-trends affecting entire industries,” the VC trade association wrote it its report.
Another encouraging sign for startups: 28 went public last quarter, the most in three years.
Venture funds generated US$4.12bil as a result, more than any quarter since Facebook Inc held
2012.
But acquisitions are the biggest driver of VC returns, and there were plenty of those last quarter, too – companies spent US$8.8bil to buy 134 venture-backed startups. — Bloomberg its initial public offering in May