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Alternative Market Briefing

Venture Capital rebounds in Q3 as dealflow and valuations increase

Wednesday, October 14, 2020

Bailey McCann, Opalesque New York:

Despite the pandemic slowing down other parts of the private equity universe, new data from PitchBook and NVCA shows that dealflow in venture capital remained strong in Q3. The $37.8 billion invested in Q3 was relatively on par with Q3 2019, thanks largely to late-stage investments. VCs are also managing the shift to remote work more successfully than other GPs.

223 deals $100 million and above closed through the first nine months of 2020, putting the year on pace to set a new record for VC mega-deal count, according to the report. This trend has been accelerated by the pandemic as investors prefer higher quality businesses during times of volatility. Larger funds have also had more success. Through Q3, US VC firms have raised a total of $56.6 billion across 228 funds, exceeding 2019's yearly fundraising value of $54.9 billion.

In tandem with deal sizes, valuations at the late stage continued to soar relative to 2019 through Q3 2020. The median and average pre-money valuations now sit at $90.0 million and $672.3 million, respectively.

IPO window reopens

The robust investment environment for startups alongside the rapid rise of SPACs has reopened the IPO window. Exits were the hardest hit segment of the VC ecosystem over the first six months of the year, but all that changed in Q3. There were 13 IPOs at a $1 billion+ valuation in Q3, which is more than the total number of VC-backed IPOs in Q1 2020.

Early sta......................

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