What drop in VC?

Print 21 April 2016
Kyle Stanford / PitchBook Blog

The venture crash is coming! Alarmist headlines have recently popped up regarding the drop in venture capital suffered in 1Q. In actuality, more than $18 billion was invested during the quarter through venture deals in the U.S. alone, according to the PitchBook Platform, representing an uptick from capital invested in 4Q.

The increase does come as a slight surprise. Deal volume is down, and valuation figures have seemingly been propped up over the past year by unicorns receiving large, late-stage deals from non-traditional investors such as hedge funds. But even as those investors pull back from VC, median deal sizes and total capital invested have continued to rise. 

There's no doubt deal activity is down, but with more than 2,200 deals completed in the U.S. during 1Q, that dip is negligible QoQ. Venture capital invested, on the other hand, shows no signs of falling back to earth in the immediate future. Investors may be taking a tighter grip on their checkbooks before doling out follow-on rounds, but the startups that are raising additional investments are grabbing larger rounds in the process.

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