Venture Capital Chalks Up Record Deal Year

Tom Burroughes

4 February 2019

The past year was a record for the number of venture capital deals, highlighting how the asset class has become a favourite among entities such as family offices and others looking for yield, even at the cost of low liquidity. Asia has provided a new influx of investors.

According to Preqin, the research firm that tracks alternative assets, there were 14,889 venture capital deals worth a total of $274 billion in 2018. In 2013, for example, 4,789 investors were involved with at least one funding round but that has expanded rapidly, so in 2018 the investor number rose to 10,620.

Despite more deal makers entering the venture capital space, the most active deal makers have maintained their dominance of total activity: in 2018, the 20 most active deal makers accounted for 14 per cent of the total number of deals, versus 15 per cent that they were involved with in 2013.

The rising number of active deal makers is partly due to growing participation in Asia. Five years ago, investors in North America accounted for over half of venture capital deal activity, compared with around 10 per cent involving Asia-based investors. In 2018, however, almost three out of 10 deals that involved deal makers were in Asia.

“While the rise in capital totals is partly due to mega funding rounds for multi-billion dollar unicorns, the rise in the number of players is symptomatic of venture capital’s growing importance. Especially in emerging markets, venture capital funding is a valuable part of the SME and start-up landscape – as evidenced by the enthusiasm with which China and other emerging economies have embraced the industry in recent years,” Richard Stus, head of private capital research, said.