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Alternative Market Briefing

2019 to outpace 2018 for full-year venture capital fundraising in the US

Monday, August 19, 2019

Laxman Pai, Opalesque Asia:

Nearly 200 US-based venture capital funds closed in H1 2019; however, there are still another 1,004 funds in the market collectively seeking over $95bn, revealed a Preqin report.

According to Preqin and First Republic update on US venture capital, this is a 20% increase in the number of funds on the road from the same time last year and, when combined with an already robust H1 for fundraising, is a strong indicator that 2019 will outpace 2018 for full-year fundraising.

Eleven funds in the market are mega-funds targeting $1bn or more and represent nearly a quarter (24%) of total capital sought.

Of these mega-funds, six have a geographic scope that includes regions outside the US; however, only two funds aim to invest their entire pool of capital internationally.

SoftBank Innovation Fund and The Rise Fund II were established to invest in Latin America and emerging markets respectively in line with each manager's dedicated strategy to invest outside the US.

Although nine of the 11 mega-funds raising have a general venture capital focus, stage-agnostic funds still record a significantly lower average fund size than funds with an expansion-stage focus ($173m vs. $283m respectively).

Since inexperienced managers will often take a stage-agnostic approach, fund sizes vary greatly between new and established managers.

Expansion-stage funds are typically run by experienced managers with a specific fundraising goal.


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