Global venture funding to financial technology startups totaled $12 billion across 751 deals in 2026 as of April 6, per Crunchbase . That’s a 5% increase in dollars raised compared to the $11.4 billion raised across 1,097 — or 31.5% fewer — deals during the same time period in 2025.

This trend signals larger deal sizes. Indeed, late-stage or growth funding in the first quarter of 2026 totaled $6.9 billion, up 8% compared to $6.4 billion raised at those stages in the 2025 first quarter.

However, sequentially, the $12 billion raised is down 33% compared to the fourth quarter of 2025, when fintech startups raised $17.8 billion globally. The $6.9 billion raised in late-stage or growth funding is also down markedly — by 43% — compared to the $12.1 billion raised by fintech startups in Q4 2025.

The trend in the first quarter also mirrors what we saw in 2025 as a whole, with global venture funding to fintech startups climbing to its highest level in several quarters, boosted by later-stage deals.

Total global funding to VC-backed financial technology startups totaled $53.8 billion in 2025, per Crunchbase . That’s an approximately 29.3% increase from 2024’s total of $41.6 billion raised.

US booms

U.S.-based startups have historically raised more fintech funding than any other country in the world, and the first quarter of 2026 was no different.

Of the $12 billion raised by startups globally, just over half — or $6.3 billion — flowed to fintech companies based in the U.S. That was an impressive 47% increase compared to the $4.3 billion raised by U.S. fintech startups in the 2025 first quarter. However, it was down 50% from the $12.6 billion that U.S. financial technology startups raised in the fourth quarter of 2025.

The United Kingdom was the second-largest recipient of venture capital, with startups in the region raising a total of $1.2 billion. India came in third, raising $900 million.

Big deals for unicorns

Several fintech startups raised nine-figure rounds in the first quarter, with some doubling their valuations since their last venture financings.

Predictions marketplace was the largest recipient of capital in the first quarter. In March, the company doubled its valuation to $22 billion in just three months with a $1 billion raise led by . The New York-based startup had just raised $1 billion in Series E funding at an $11 billion valuation in December.

In February, , a digital savings platform, raised $385 million in a Series E funding round co-led by and . The New York-based startup said its new valuation was $2 billion, double it achieved when raising its $125 million Series D round in December 2023.

And in January, , which is building infrastructure for payments with stablecoins, raised $250 million in a Series C funding round led by . Its post-money valuation was $1.95 billion, up 17x from last March.

Investors remain bullish

, partner and head of U.S. at , said his firm has been investing at a slightly slower pace so far in 2026 than in years past. But he cited it as “more a quirk of deal flow” and where it gets conviction, rather than a decision to slow the firm’s investing pace.

“It’s certainly true that macroeconomics and geopolitics play a role,” he told Crunchbase News, “but mostly we’re just focused on finding high-conviction companies to back.”

QED is extremely bullish on the application layer for AI in fintech and stablecoin opportunities, and has backed several startups that Gerety said “harness the power of LLMs with the security and reliability guarantees that finance needs.” (, which raised a $45 million Series B in January and is building an AI assistant for financial advisers, is one of those companies.)

“Just in the last few months, agents are now actually able to be effective in many processing tasks, but the stakes in finance are too high for LLMs to conquer financial workflows alone,” Gerety said. “Finance runs on trust, not probability.”

Looking ahead, he said QED remains bullish on fintech overall for the year. Part of the excitement is around the fact that larger companies are “transforming” their operations with agentic workflows, Gerety noted.

“More and more transformation is moving from the ‘co-pilot’ phase, and we’re moving into the ‘OpenClaw’ phase, when reasoning agents will start to actually do all the work that was too tedious and slow to be done manually,” he added.

The geopolitical situation will likely hinder some companies from taking the IPO plunge, in Gerety’s view, although a few companies in QED’s portfolios are “bubbling.”

, partner at , said his firm is on track to make eight to 10 core investments in Seed or Series A companies this year — about the same number as in previous years.

“We’re investing in AI-enabled applications while maintaining patience and focus in our deployment of capital,” he said. “We look for durable, enduring businesses that we believe will withstand the current hype cycle and investment frenzy.”

While TTV is investing in AI-enabled companies, Kapur said it also agrees with that “an AI reset is coming.”

“Many investors have already made their money by getting in on the ground floor, and others are trying to replicate their success,” he told Crunchbase News. “We’re focused on investing in the application layer of AI, and we’re still in the early days with more widespread prosperity and a democratization of enterprise value creation yet to come.”

In particular, TTV sees the biggest opportunity in early-stage AI-native companies that are solving problems in mission-critical workflows “while building durable moats.”

“These platforms will earn the right to be distribution endpoints for financial products … and are even more valuable in the age of AI,” he said.

He believes we may see some fintech IPOs in 2026, but that they will largely depend on how the potential mega IPOs (from the likes of , and ) perform.

“If those IPOs underperform, others may opt to stay private longer,” Kapur said.

Looking ahead, he predicts we’ll continue to see accelerated adoption of AI in financial services, first through straightforward applications, then more operationally complex use cases.

“More broadly, we’re watching how the foundational LLMs further move up into the application layer, which is imperative to the long-term sustainability of their business models,” Kapur said. “We think financial services and fintech are unique enough categories where de novo startups and standalone businesses will beat platforms building experimental applications.”

Related Crunchbase query:

Related reading:

• Fintech Funding Jumped 27% In 2025 With Fewer Deals But Bigger Checks
• Kalshi Secures $1B To Expand Predictions Market Platform
• Digital Savings Startup Vestwell Lands $385M, Doubles Valuation
• Stablecoin Startup Rain Raises $250M Series C at $1.95B Valuation – Its Third Round In Less Than A Year
• Exclusive: Zocks Raises $45M Series B From Lightspeed, QED For AI Assistant To Financial Advisers

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That was the broad finding from our latest tally of Crunchbase data for U.S. and Canadian venture funding. It shows the pullback that commenced earlier this year has intensified in recent months, as tech valuations in public and private markets contract and the IPO window remains largely shuttered.

Overall, investors put $39.7 billion to work in seed- through growth-stage deals in Q3, down 53% year over year and down 37% from Q2. The year-over-year decline was most pronounced at late stage, which was down 63% in the just-ended quarter.

For perspective, we lay out North American funding totals, color-coded by stage, for the past 11 quarters:

The latest numbers appear less alarming when looking across a two-year time horizon, rather than solely comparing to 2021’s record-breaking tallies. By historical standards, funding totals are still pretty high. Early- and seed-stage dealmaking, for instance, is actually above 2020 levels.

Below, we look at the latest quarterly numbers in more detail, focusing on investment by stage as well as major exits.

Late-stage and tech growth contract sharply

We’ll start with late stage, which saw the sharpest slowdown.

Altogether, late-stage venture and technology growth funding totaled $19.4 billion in Q3. That’s a drop of nearly two-thirds from the $53 billion invested in the year-ago quarter. Funding is also down about 45% from Q2. 

Deal counts also fell, albeit not as precipitously. For perspective, we look at round counts and investment totals for the past five quarters below:

Public markets may be driving much of the pullback in late-stage private markets. With tech and biotech shares down sharply on major exchanges, investors are rethinking valuations. Additionally, with few IPOs happening, pre-IPO rounds aren’t getting done either.

Meanwhile, many late-stage startups, still flush with cash from the 2021 funding spree, may be putting off new raises until signs of market recovery emerge.

Even as late stage contracted, we did see some big rounds. The largest late-stage funding recipients for Q3 include digital manufacturing startup ($355 million Series C), small business policy provider ($315 million Series D), and urban greenhouse company ($310 million Series E).

Early stage is down, but less so

Investors also tapped the brakes on early-stage dealmaking. For Q3, they put $17 billion into 879 known funding rounds. In dollar terms, that represents a 40% drop from the year-ago total and a 28% drop from Q2.

For context, we look at early-stage investment and round counts for the past five quarters below:

Early stage is showing a less dramatic decline than late stage in part because companies are further from exit. Apparently, there’s more confidence that market conditions will improve as these startups mature.

By far the largest early-stage deal of the quarter was a $1 billion Series A for , which provides charging stations for electric fleets. Next up was a $350 Series A for , a spinoff working on asthma treatments, followed by a $300 million Series B for , a developer of Web3 infrastructure.

Seed slows some

The funding slowdown was much less pronounced at seed stage.

Overall, investors put $3.3 billion into seed-stage deals in Q3. That’s down 18% from Q2 and 6% from the year-ago quarter, which is markedly less than what we saw at later stages.

Seed stage’s comparatively strong showing indicates that investors are more confident about the long-term outlook than the short-term one. Also, while odds of failure are higher for newly minted startups, valuations are lower, which helps mitigate the risk.

Some of the Q3 rounds were unusually large by seed standards. For instance , an NFT project around intellectual property, snagged $50 million in a July financing. And , a mental health startup focused on seniors, landed a $32 million seed round in September.

Still, those were the outliers. The median disclosed seed or pre-seed round for Q3 was around $2 million, and only 25 deals were for $15 million or higher.

Exits

As Q3 was winding to a close, it was looking like a pretty sluggish exit environment, with a mostly shuttered IPO window and not a ton of big M&A action.

But then, in mid-September, shattered that narrative, announcing an agreement to buy digital design collaboration unicorn for $20 billion in stock and cash, in what’s been called the largest acquisition of a private, venture-backed company to date.

So yes, it might still look like lean times for most exit-hungry investors. But clearly, it’s still an environment where big deals can get done. Below, we look at what transpired in Q3 for both public offerings and M&A exits.

M&A

We’ll start with M&A, which, as previously mentioned, was largely dominated by the ginormous Figma acquisition. That deal was several multiples larger than every other disclosed acquisition combined.

Still, while no one else was spending like Adobe, there were some interesting and good-sized M&A deals over the course of the quarter. We list the top seven below:

Public offerings

The third quarter was not a great time for tech and biotech public offerings, given that both sectors have been taking a beating on major exchanges. Unprofitable companies—a category that includes most-recently public venture-backed deals—were particularly out of fashion.

Even in this suboptimal environment, however, several funded companies did make it to market, either through previously announced SPAC transactions or traditional IPOs. We list nine public market debuts below:

The largest debut was , a Lexington, Kentucky-based online marketplace for waste and recycling, which wrapped up a SPAC merger in August and debuted at a $1.7 billion valuation. Shares have fallen sharply since the debut.

Next up was , a quantum computing company that completed its SPAC merger in August in a deal that valued the company around $1.6 billion. Shares are well below their peak but are holding at better-than-average for a SPAC deal.

Down from a very high peak

So as we bid adieu to Q3, what should one make of these mostly downwardly trending numbers?

One of the key things to keep in mind is that we are scaling down from extremely tall heights, as 2021 surpassed prior funding records by a long shot. So, while an over 50% year-over-year funding decline may make for an alarming headline, we’re still close to where we were a couple years ago. And at the time, that was considered a pretty good period for startup funding.

Of course, late stage is faring worse than early stage and seed. Given the large sums of dry powder still in the coffers of venture investors, however, it’s likely they’ll begin spending more profusely once more consensus emerges around valuations and exit conditions improve.

For now, however, the numbers are indeed down. No up cycle lasts forever.

Methodology

The data contained in this report comes directly from Crunchbase, and is based on reported data. Data reported is as of Oct. 3, 2022.

Note that data lags are most pronounced at the earliest stages of venture activity, with seed funding amounts increasing significantly after the end of a quarter/year.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of funding terms

Seed and angel consists of seed, pre-seed and angel rounds. Crunchbase also includes venture rounds of unknown series, equity crowdfunding and convertible notes at $3 million (USD or as-converted USD equivalent) or less.

Early stage consists of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, corporate venture and other rounds above $3 million, and those less than or equal to $15 million.

Late stage consists of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, corporate venture and other rounds above $15 million.

Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So basically, any round from the previously defined stages.)

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The proportion of female co-founded companies has doubled since 2009 which stood at 10 percent.

In our very , published in early 2015 after we added gender to Crunchbase, we noted: “In 2009, 9.5% startups had at least one woman founder, but by 2014 that rate had almost doubled to 18%. At the same time, the absolute number of companies (along with the total number of startups) with a female founder more than quadrupled from 117 in 2009 to 555 in 2014.”

Back in 2009 there were far fewer startups, and a lot less funding.

In the five years since 2014, close to 10,000 startups with at least one female founder have raised funding. This signals a huge shift in our industry and our reporting on founders reflects that.

Along with the changed funding environment, many notable female-founded venture firms have been set up in the last 10 years, including many of which have contributed to our coverage on this issue.

The list includes , ,�� , , , , , , , , , , , , , , , , , , , , , the more the recently founded and among many more firms.

The year of 2019 broke records with 21 new female-founded unicorns reported by Crunchbase. In 2018 we reported on 15 new unicorns, with previous years all in the single digits.

The total number of newly funded startups with a female founder is one indicator of change, along with advancement of women in venture. How female founders fare when it comes to raising venture funding is another measure we explore.

Invested Dollars In Female-Founded Companies

In 2019, $26.7 billion was invested into companies with at least one female co-founder; just over $6 billion in female only; and $20.6 billion in female/male co-founded companies.

This is the second-largest funding amount invested in female founders in a single year. There was $44.8 billion invested in 2018, including one of  the single largest rounds to a female-founded firm with the deal.

Proportion Of Dollars Down YoY

Let’s look at these dollars in the context of overall investments in male- versus female-founded companies. The year 2019 closed with 3 percent going to female-founded and 10 percent to male/female co-founded companies making up 13 percent of all seed, venture and corporate venture dollars. Since 2016 the proportion to female only and male/female co-founded has not shifted from 13 percent overall — barring 2018 with Ant Financial, which single-handedly increased the proportion to female only founded.

Deal Counts Flat YoY

The proportion of deals in 2019 is slightly higher when compared with dollar volume. Female-only was at 6 percent and female/male co-founded companies was 13 percent, making up 19 percent of all funding rounds. Since 2016 deal count has gone up by 2 percent, and is flat year over year.

2019 By Funding Stage

Many founders seek to understand the numbers we just looked at through each funding stage. We break it down here for 2019 rounds.

Overall trends are that seed tends to be higher in count and amount, and at each stage moving through Series A, B and C+ rounds. Counts tend to be higher than amounts–an indicator that female founders raise less than their male counterparts. And female only founders raise less of a proportion of funding than male/female co-founded teams.

With seed as the first step in a startup  journey, these percentages are indicators for trends in future years for early- and late-stage rounds.

Investor Community Speaks

We spoke with investors who are seeking to impact these numbers and understand the challenges women face.

“When you’re a founder, the terms that are set are ultimately driven by your ability to negotiate,” said , founding member of .

She explained further:

“Certain founders may only get one term sheet, so that’s the deal they have to accept because they don’t have as much negotiation leverage. But other founders might go to Sand Hill Road and get six term sheets in a week; they’re going to drive the negotiation, they’re going to have lower dilution and higher valuations and they’re going to set the terms. That’s something we talked about a lot in our group. Do women have as many options when they go out raising? Are they able to command and demand that same sort of excitement about the companies that they’re building where they’re able to drive the negotiation process and set those terms?”

, co-founder of , who setup a firm specifically to invest in consumer tech startups with a female founder, is familiar with the issues female founders face.

As she explained:

“I think the issue is pretty simple. This is an industry that has always run on relationship networks. Someone you know and respect makes a warm introduction to a great founder and you agree to hear their pitch. But if women are not part of your network, you’re just at a big disadvantage — you’re going to miss a lot of great companies. I think investors are finally starting to wake up to this. More and more VC firms are adding a female partner  — partly because there’s been a lot of noise about it, but mostly out of self interest. Which by the way, I wholeheartedly support. And I think with initiatives like , you’re going to see more of that.”

Methodology: Notes On The Data

For this quarterly report, our analysis is based on announced funding to companies with founders associated. This is in contrast to our overall venture capital report where we use projected data in order to correct for data lags for the most recent quarter. Over time we fully expect more founders to be added to Crunchbase, as well as a reporting lag on funding which will be greater for the most recent year. For this report we include private company fundings from seed through to late-stage venture. We exclude private equity rounds.

Crunchbase’s dataset is constantly expanding, but there are gaps. A company may not have founders listed on its Crunchbase profile. Or Crunchbase might not have a gender listed for founders that are attached to the person’s Crunchbase profile. (Note: In addition to “male” and “female,” Crunchbase has over two dozen other gender tags.) Based on an analysis of current data for this report, more than 80 percent of dollars raised in the last five years are associated with companies that have founders.

Crunchbase, like all databases of private-market transactions, has a documented pattern of reporting delays. It can sometimes take weeks to months for some rounds to be announced publicly and subsequently get added to Crunchbase. This is especially the case for seed and early-stage deals, which are often raised by companies before the company launches a product, or otherwise gets much outside media coverage which surfaces information about the company’s funding history. As data is added to Crunchbase over time, some of the numbers in this report may shift slightly.

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First Funded Chart:

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According to Crunchbase data, over $122 billion has been invested in European startups, across 48 countries, in the last five years.

And 2019 is a record year for European startups with companies raising over $36 billion–a five-year high, and over $7 billion more than European startups raised the previous year. Year-over-year growth tracks at 25 percent. Since 2015, the amount of money raised by European startups has more than doubled.

Strong European growth in 2019 contrasts with our reporting on overall global venture, which is down year over year (largely based on China late-stage fundings slowing down in 2019). For the U.S. and Canada, invested dollars are projected to grow at a small percentage. It is worth noting that 2018 was a peak for global venture funding over the last 10 years and grew 47 percent year over year from 2017 to 2018.

Both our global and North American reports use projected data in order to overcome reporting delays. With our European report we look at reported–not projected–data, which means that 2019 numbers will increase over time, relative to previous years. We also excluded private equity and corporate rounds for this report.

Northern Europe, which Crunchbase News defines as including the United Kingdom, Nordic countries, Lithuania, Latvia and Estonia, pulled in the majority of that amount–$18.63 billion to be exact. The U.K. can take credit for that, as it led the region in deal and dollar volume for the past year. Sweden, also part of Northern Europe, is the fourth-largest country for European funding rounds in 2019.

Western Europe raised $14.9 billion in 2019. Western Europe includes Germany, France and Switzerland–three countries in the top six by funding counts and amounts.

Eastern and Southern Europe, which includes Spain (in the top six), Italy and Poland raised $2.5 billion in funding in 2019.

Year-over-year deal counts could be perceived to be down. However, early-stage deal counts–Series A and B–are on par at 1,000 rounds for both 2018 and 2019, with later-stage venture deal counts up  by 16 percent year over year. With much of the difference in funding round counts attributed to the seed stage, where we see the most reporting delays, we fully expect these numbers to go up during 2020. Reporting delays for funding amounts are less pronounced in Crunchbase data.

In terms of deal volume, the United Kingdom took first place by far, with 1,425 deals totaling $14.31 billion in 2019, representing 40 percent of European funding in 2019. Germany was the runner-up, with 444 deals adding up to $6.65 billion (18 percent) last year. France wasn’t far behind Germany, with 425 deals totaling $4.39 billion (12 percent) in 2019.

The largest venture funding round for 2019 was London’s , which raised $1.25 billion in March in a round led by Softbank–also the only VC round for a European company that was over $1 billion, according to Crunchbase. London’s took second place with its $575 million , and Germany’s took third place with its €500 million (approximately $555 million) .

Investors In European Startups

Let’s take a look at the firms that are most active in European startups at each stage–seed, early- and late-stage venture.

The investors at the seed stage in European startups represent a mix of pre-seed/accelerator funds typically investing below $100,000 along with seed funds investing around $500,000 to $3 million.

The leading pre-seed stage investors include , a Hungarian state-owned venture fund and from Switzerland, which provide pre-seed funding to entrepreneurs from Swiss Universities. and are global accelerators with Europe-based accelerator programs. is a U.K.-based business angels club.

Germany-based , in the U.K., and in France are all among the most active seed-stage investment funds leading the larger seed rounds.

Active early stage investors (Series A and B rounds) in 2019 include , and , which are all based in France. The next set of investors,, , and are all U.K.-headquartered firms. is in Sweden and is in Austria. , and are all based in Germany.

When viewed by investors leading Series A and B rounds, a few new venture investors rise to the top 12 namely (U.K.) , (U.S.) and (France).

The most active investors in late-stage rounds include European and global players. Late-stage rounds are comprised of Series C+ rounds, as well as venture rounds above $15 million. Firms not previously mentioned include , a U.S.-based venture firm with a well-established London office celebrating 20 years this year.

Firms in this list that lead at late stage are , an investment banking firm, and which invests in growth-stage startups. Both are headquartered in New York. a PE and venture firm based out of Paris also leads late-stage rounds.

“An important development we saw this year is that the outside world now also shares our homegrown belief in European tech,” said , a partner and head of research at Atomico. “Twenty-one percent of all rounds in Europe this year involved participation from a U.S. or Asian investor. That’s doubled since five years ago. This funding is especially important in later-stage funding deals.”

“There is certainly more availability of capital in Europe now,” said a partner at Accel in London commenting on what has changed in the European funding ecosystem. “Ten years ago there was this stereotype that European founders are not ambitious enough. This is no longer the conversation.”

According to Wehmeier and reflected in this report “We’re seeing the successes of the first generation of European tech startups become a platform for even greater success. This matters because you need three things to have a tech ecosystem: talent, capital and belief. The first generation of successes has birthed talent and is attracting more and more capital from Europe-specific funds. But continued successes have also made people believe in the potential of this ecosystem. Belief is what helps people with great ideas today become the founders of tomorrow. It’s what makes people give up the security of a well-paid corporate job for the unpredictability of startup life. And it shapes capital allocation and investment.”

The increase in funding in 2019 to European startups is visible at all stages. And with many firms active in venture, we see a robust ecosystem developing across Europe.

Methodology

For the regional divisions, we relied on the United Nations Geoscheme for Europe, which is produced by the United Nations Statistics Division. Information about the Geoscheme can be found or on the

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events as reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Analysis is based on data in Crunchbase as of Jan. 7, 2020.

Glossary of Funding Terms

• • Seed/Angel include financings that are classified as a seed or angel, including accelerator fundings and equity crowdfunding below $5 million.
  • Early-stage venture includes financings that are classified as a Series A or B, venture rounds without a designated series that are below $15 million and equity crowdfunding above $5 million unless otherwise noted.
  • Late stage venture includes financings that are classified as a Series C+ and venture rounds greater than $15 million.
  • Note: Fundings denoted by Crunchbase as corporate rounds or private equity are not included in this report. In some instances, this will impact totals to a significant degree.

Illustration:

Companies, big and small, continued to flock to the city in droves. Several venture capital firms based in Austin announced nine-figure funds, a new unicorn was born, and venture funding hit record numbers. Plus, those venture rounds included more global investors than ever.

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So as the year and decade have officially drawn to a close, we thought it would be a good time to quantify some of the recent growth Austin has experienced. When I asked our data guru, Jason Rowley, to pull some numbers, I had a few hunches about what he’d find. And I’m pleased to report that I was right.

Let’s start with the numbers.

Venture funding in Austin totaled $1.84 billion for the year. That’s up 19.5 percent compared to the $1.54 billion raised in 2018 and an impressive 87 percent compared to $983 million in 2017. As is typical, Dallas-Fort Worth- and Houston-area startups trailed far behind the Texas capital when it came to venture dollars raised during the year.

Even though it sometimes feels like it, Austin is not the only Texas city bringing in venture dollars it’s just the largest (for now). Area startups brought in 61 percent of the venture dollars raised (a total of $3 billion) in the Lone Star state last year. Dallas-Fort Worth came in a fairly distant second, with Houston not far behind it.

To put Austin’s record figures in context, I asked Jason to rank Austin’s funding last year to other major tech markets in the U.S. What we found is that in 2019, Austin officially broke the top 10 when it comes to recipients of known venture capital funding. (There’s always reporting delays so these figures will most certainly change.) While the amount of dollars raised ranked significantly less than that raised in San Francisco (no big surprise), it was still respectable enough to rank No. 10.

Austin was also the only city in the top 10 to be located outside the historically largest recipients of venture capital markets of the Bay Area, Seattle, Boston/Cambridge and New York.

It also ranked seventh in terms of number of deals.

Another thing I suspected was that the Austin startup scene was maturing and our data proved that theory. The city has historically been known for its emerging startup scene, but that’s slowly changing. As you can see below, in 2015 seed/angel rounds made up more than half (56 percent to be exact) of the venture rounds closed. By 2019, they made up just 43 percent. Meanwhile, early-stage rounds ticked up by 10 percent and late-stage rounds by 3 percent.

Drilling down

Austin both started and finished the year on a strong note, while in between was on the slow side. In the fourth quarter in particular, Austin startups raised a combined $575.4 million, up 89.4 percent from $303.7 million from Q4 2018. Deal volume was down – the money was raised across 34 deals in Q4 2019 compared to 48 in Q4 2018, another indicator of a maturing market.

A new unicorn was born during that three-month period that we (of course) covered. In October, , a marketplace for on-demand services and skilled labor in the energy industry, raised a $300 million Series D round led by (a16z). The round values the company at $1.9 billion, according to . It also marked the largest funding round raised by a Texas company in all of 2019, according to Crunchbase data. The round also represented more than half of all venture that was raised in Austin during the fourth quarter.

That round took place just days after AI startup $100 million Series C, which was led by and included participation from , among others.

The three largest rounds in the state in 2019 weren’t all in Austin, at least. Dallas-based raised in February before by pharma giant in May. And, Houston-based biopharmaceutical company (formerly known as ViraCyte) announced , which Jason covered in May. ���貹�����Dz��Ծ��پ��Dz�’s raise marked the fourth largest in Texas as a whole for the year.

VCs weigh in

in April 2019 announced the close of its second fund, topping it out at $105 million. The 6-year-old venture firm primarily invests in early-stage startups with a focus on the Texas market. I talked with co-founders and partners and to get their thoughts on what went down in 2019.

The year was “definitely a blockbuster,” Srinivasan said. LiveOak signed 10 new investments in 2019, and of those 10, seven were in Austin. The activity was “indicative of a tremendous surge in really high-quality company formation underway in this market.”

Austin has historically been known for its large number of software startups. I’ve also noticed a serious uptick in real estate-related companies here, which made me curious about which sectors the LiveOak team has seen emerging. That’s when Srinivasan introduced me to a new acronym: Firetech — finance, insurance and real estate.

“We’re seeing a lot of activity in those industries,” he said. Indeed, during the year, SaaS fintech startup raised a $60 million Series C just seven months after closing its $30 million , and just over a year after closing its $10 million . Another example lies in real estate startup (and LiveOak portfolio company) July 2019 close of $25 million in debt and equity financing.

Meanwhile, Shamapant agreed the Austin market is maturing.

“Years ago, people asked us why there were so many large financings in the Bay Area and not in Texas,” he said. “We always told them it was just a question of time. The companies that could raise those big financings just started getting funded four to five years ago. Now the Austin market is finally to the point where there are plenty of companies that have seen that kind of maturity. I think we are finally there now.”

Partner said he believes the growth of so many large tech companies in Austin (such as Apple and Google) is having a direct impact on the startup scene.

“Their presence is bringing a lot of talented folks here, both technical and business talent, who end up either working for a startup or founding one,” he said.

Additionally, people are flocking to Austin from both coasts (but particularly ). I examined the trend in this story and . The city’s (relatively) lower cost of living, among other factors, is significant.

S3 Ventures’ Engineer has also observed that more VCs are looking at Texas.

“More firms in general are identifying Texas as a geography in which they want to invest,” he said. “There’s been a real structural change where more VCs are including Texas as a stopover they make on a regular basis.”

In 2018, Austin-based S3 Ventures (which also focuses on Texas startups) saw six exits. In 2019, it was focused on investments and put $50 million into 17 companies, with three of those being new investments. Eighty percent to 85 percent of its portfolio is based in Austin.

Meanwhile, Silverton Partners’ believes that Austin’s record funding is in line with the enthusiasm and bullishness of the overall economy in 2019. For those who are unfamiliar; 16-year-old Silverton Partners is Austin’s most active venture firm and is in the process of raising a targeted $120 million sixth fund. In 2019, Silverton made 20 investments, including five new ones. It also saw a nice exit in being by in January for $225 million. (Just last week, it had another exit in women’s shaving startup being acquired by P&G, which we covered here.)

He believes that overall record fund sizes have led to increased competition which in turn has led to “many late-stage venture investors in search of value in new geographies like Austin.”

Chen also acknowledged Austin’s overall growth as a city and tech hub. As mentioned above, Austin, and Texas more broadly, has been a primary beneficiary of the talent flight out of the Bay Area.

Chen said he sees it firsthand.

“I receive emails nearly every day from startup founders and employees asking for tips on Austin,” he told me.

When it comes to trends, Chen pointed out that Austin’s startup scene is also gaining momentum in two other important areas.

For one, marketplace and aggregation platforms are raising large sums of capital (digital health startup April 2019 $50 million raise is one example). Secondly, 2019 saw startups that use artificial intelligence in their software bring in large rounds. Examples include SparkCognition and ScaleFactor.

Chen said: “Austin has been a great market for these businesses to achieve more efficient growth with a concentration of specialized talent and the benefit of a labor cost arbitrage against the Bay Area.”

Methodology

The data presented in this report is based on a snapshot of Crunchbase data from early January 2019. Re-running the numbers in the future may yield slightly different results for Q4 2019 and prior quarters as new data gets added to Crunchbase over time. Funding round data for private companies is often subject to reporting delays, particularly affecting seed and early-stage rounds. For more information about Crunchbase News’s methodology, check out the Methodology page.

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That’s the broad finding from preliminary North American venture capital funding data for Q4 of 2019. The quarter delivers a slight downer of an ending to a bullish year for startup investment, with funding totals for all of 2019 forecast to come in a bit above year-ago levels.

Altogether, startup backers invested $31.6 billion across all stages in the fourth quarter, down slightly from the prior quarter and well below year-ago levels. For all of 2019, meanwhile, Crunchbase projects that investors put roughly $132 billion to work across all stages, relatively flat with the prior year.

As usual, a handful of gigantic rounds boosted investment totals and a few really big exits juiced returns. Below, we look at numbers and key deals in more detail, breaking down investment totals by stage, highlighting largest rounds and tallying up IPOs and acquisitions.

Q4: Startup Fundings Dip A Bit In Q4

Let’s start by looking at the fourth-quarter totals. As we noted previously, this wasn’t a record-setting quarter by any measure. In fact, projected investment across all stages is on track to hit the lowest point in five quarters.

We lay out totals for each of the past five quarters in the chart below.

Round counts, meanwhile, look fairly flat for Q4. We lay out projected totals for the past five quarters in the chart below.

Late Stage

Next, we’ll take a look at stage-by-stage performance for Q4, starting with late stage.

Let us begin by noting that the quarter began on a somewhat down note. The WeWork IPO debacle of late Q3 had raised skepticism about the popular practice of writing enormous checks to ambitious, money-losing companies in sectors with tight margins. Some were forecasting the imminent arrival of “startup winter.”

Looking at the projected late-stage funding totals for Q4, however, it looks more like a moderate cooling than a deep freeze. Crunchbase projects that just over $16 billion will go into late-stage venture rounds (Series C and beyond) for North American companies in Q4. That’s down about a billion dollars from Q3 and the lowest level for the past five quarters. However, by historical standards, it’s still quite high.

And big rounds continued to pile up. For Q4, the largest later-stage rounds included health insurance provider ($635M), online banking startup ($500M), digital freight network ($400M) and analytics platform ($400M).

Round counts, meanwhile, held pretty steady. We chart out late-stage investment totals and round counts for the past five quarters in more detail below.

Technology Growth

Technology growth, the most volatile category we track, held up pretty well in Q4. An estimated 29 technology growth deals closed in the quarter, bringing in around $1.6 billion. That puts Q4 in the middle of the pack for the past five quarters, by both investment totals and round counts, as illustrated in the chart below.

The technology growth category commonly includes companies that are quite mature by startup standards, along with the largest average round sizes of any category. Standouts for Q4 include $270 million for payment tech provider and $175 million for search analytics platform , both out of Canada.

Early Stage

Early-stage investment rose quarter-over-quarter in Q4, per Crunchbase projections, but it’s still at the second-lowest point in the past five quarters, indicating funding levels have passed their peak.

Altogether, investors put an estimated $11.85 billion into early-stage (Series A and B) rounds in Q4, per projections. Round counts, meanwhile, are forecast to total just over 1,000, which is neither particularly high nor low compared to other recent tallies.

For perspective, we charted out both investment totals and round counts for the past five quarters below.

One could make the case that Q4 early-stage totals are a bit over-inflated due to the frequency of really large Series A and B rounds going to more mature companies that bootstrapped before raising venture capital. This includes enterprise software provider , founded in 2003, which raised a $290 million Series B, and password management platform , founded in 2005, which closed a $200 million Series A.

Other large early-stage funding recipients include oncology startup ($275M) and brand marketing platform ($200M).

Seed Stage

Seed-stage investment held up at high levels in Q4. Crunchbase projects Q4 investment of around $2 billion, the highest total in the past five quarters.

Round counts for Q4, meanwhile, look about average across the past five quarters, with roughly 1,850 deals likely to come in for the quarter. We track both investment and round counts for seed-stage deals over the past five quarters in the chart below.

One caveat: Seed stage is where we rely most heavily on projected rather than reported data, because rounds at this stage are commonly disclosed a few weeks or months after they actually close. So keep in mind, a big chunk of the total is deals we think will be added to the database but aren’t there yet.

Exits

So enough about investors putting money into the next big thing. How did they perform when it comes to generating actual returns?

As quarters go, Q4 of 2019 was not particularly terrible, nor was it especially great. The IPO window was open, but not that thrilling. M&A activity wasn’t exactly red-hot either.

IPOs

First, IPOs. As mentioned, it was not a big quarter for blockbuster tech offerings.

In all, 16 venture-backed North American companies went public in Q4, per Crunchbase data (). However, there were no “” IPOs in the mix, and not much unicorn activity either.

That said, a few cinched valuations well over a billion dollars. Standouts include payment tech provider , which ended the year with a market cap around $2.6 billion, and fertility benefits manager , which saw especially strong aftermarket performance. On the biotech side, meanwhile, larger offerings included , a developer of treatments for autoimmune diseases, and , which targets infectious diseases.

M&A

In Q4, as usual, the number of acquisitions of venture-backed, private companies exceeded the number of IPOs. However, putting a dollar figure on the M&A totals is difficult as most are for undisclosed sums.

Nonetheless, a few deals did have reported price tags, including some big ones. The largest known deal of the quarter was PayPal’s $4 billion acquisition of , an app for finding online discounts. Other large deals included , a provider of anti-fraud tools acquired by F5 Networks for $1 billion, and , a digital procurement platform purchased by Workday for $540 million.

Overall, it wasn’t a blowout quarter for venture-backed M&A, but it wasn’t unusually slow. Also noteworthy was the propensity for larger M&A deals involving public companies that were formerly venture-backed, including Google’s $2.1 billion of Fitbit.

Most Active Investors

For 2019, we didn’t see a big shift in the ranks of most active investors. As usual, a handful of established, name-brand VC firms and accelerators topped the lists, which we charted below.

First, we look at most active lead investors across all stages:

Next, most active seed investors:

Here are top early-stage investors:

And finally, these are the most active late-stage investors for Q4:

And with that, we wrap up our Q4 section and turn to the 2019 year-in-review.

2019: Startup Investors Delivered Another Blowout Year To End The Decade

While 2019 didn’t end with a bang, it was nonetheless a blowout year for North American startup investment.

When we tally up total annual investment for the decade, two years stand out: 2018 and 2019. For both those years, Crunchbase projects total annual investment of over $130 billion. As evidenced in the chart below, that’s way above every other year this past decade.

Round counts held up as well, falling just a wee bit short of 2018’s high point for the decade. For all of 2019, Crunchbase projects just shy of 13,000 funding rounds across all stages.

For 2019, we’re not seeing a dramatic shift into or away from a particular investment stage. Late stage dealmaking looks down a bit from 2018, but was too incremental to qualify as a trend. Likewise, seed-stage is up some, but also not an enormous rise.

The Big Picture

With 2019 now in the rearview mirror, it’s fair to say it’s yet another year in which the startup bull market chugged along.

It was a big year for unicorn exits, with offerings from , , , and all closing out 2019 with market capitalizations above $10 billion. While many of these newly public unicorns did not achieve the public valuations private investors hoped for, they weren’t disasters either.

On the funding side, things have certainly rebounded robustly from the slowdown seen during the financial crisis and are now at record-setting levels. Keep in mind, however, that funding increases are due in part to some shifts in the startup asset class, including the rise of unicorn herds, the propensity of high-valuation private companies to delay IPOs and the increase in investors willing to back supergiant rounds of $100 million or more.

There were some enormous funding rounds in 2019 as well, including $1 billion for freight platform , and $940 million for robotic vehicle developer . Altogether, a staggering 200 North American companies closed funding rounds of $100 million or more this past year, per Crunchbase data. That’s up from 158 in 2018.

So, overall, the numbers are still bullish, but in other ways things are looking more bearish. Particularly concerning are reports of multiple SoftBank portfolio companies cutting staff. Since SoftBank and its Vision Fund in many ways prompted the rise of huge funding rounds for money-losing unproven startups, weakness in its portfolio could have a ripple effect.

But so far, 2020 is off to a brisk funding start as well, and big rounds keep piling up. Let’s hope it ends well.

Methodology

About Projected Data:

There is often a delay between when a venture capital deal is closed and when it’s publicly reported and captured by Crunchbase. Accordingly, Crunchbase compensates for this pattern of delays by scaling reported (e.g. currently known and recorded in Crunchbase) data up in proportion to historical patterns of undercounting and late reporting.

Glossary of Funding Terms

For reporting purposes, Crunchbase aggregates its funding data into “stages,” reflecting the different phases of private company development. Rounds are classified by stage according to the following sets of rules.

• Angel & Seed-stage is comprised of seed, pre-seed, and angel rounds. Crunchbase also includes venture rounds of unknown series, transactions of undisclosed type, and convertible notes totaling $1 million (USD or as-converted USD equivalent) or less. Equity crowdfunding rounds with no listed dollar value, as well as those totaling less than $5 million, are also counted as seed-stage.
• Early stage is comprised of Series A and Series B rounds, as well as other round types. Crunchbase includes venture rounds of unknown series, transactions of undisclosed type, and convertible notes totaling between $1,000,001 and $15,000,000. Convertible note rounds with missing dollar values are also counted as early-stage.
• Late stage is comprised of Series C, Series D, Series E and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, transactions of undisclosed type and convertible notes of $15,000,001 or more.
• Technology growth is a private-equity round raised by a company that has previously raised a “venture” round. (So, basically, any round from the previously defined stages.)

Note: Fundings denoted by Crunchbase as corporate rounds are not included in Crunchbase stage classification metrics and therefore do not get included in annual and quarterly startup investment totals. In some instances, this will impact totals to a significant degree.

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Looking back at the last decade, it’s fitting, then, that the worldwide VC market accelerated as well.

According to Crunchbase projections, over $1.5 trillion was invested in venture capital deals, worldwide between 2010 and 2019, with most of that coming in just the past few years.

In 2019 alone, Crunchbase projects that roughly $294.8 billion was invested in nearly 32,800 deals across the venture spectrum – from tiny pre-seed and “sprout” rounds to supergiant pre-IPO technology growth deals struck with private investors before a public market debut.

In the chart below, we plot projected dollar volume, aggregated by year, over the past decade.

And here’s deal volume from the past 10 years.

When it comes to deal volume, 2019 closes out the 2010s on a high note. More venture deals were struck last year, worldwide, than in any year prior. With respect to dollar volume, 2019 remains the second-most active year on record. Take out some of the largest outlier rounds from 2018 (including round raised by Chinese fintech firm , a for WeWork, and for China-based TikTok-maker ) and the gap doesn’t seem that big.

But this is not, ultimately, a report looking back at the decade as a whole. Here, we’ll mostly focus on what happened in the last quarter of 2019, with some general facts, figures and commentary about last year interspersed throughout. We’ll divide this report into two main sections: Money In and Money Out, covering startup activity from first check to exit.

Money In

Pace of Dealmaking

Crunchbase projects that there were 8,183 venture rounds struck in Q4 2019, down slightly from an all-time high set in the third quarter. Since the first quarter of 2018, total projected venture deal volume has hovered in a rough range of 7,500 to 8,500 rounds per quarter and hasn’t experienced notable upward or downward movement on a consistent basis. In other words, despite minor variations and small upswings and downtrends, global venture deal volume has largely stabilized over the past couple of years.

Alongside the stabilization in overall venture deal volume, there is another metric which has also stabilized: the relative “balance of power” in deal volume between North America and the rest of the world.

Of the projected deal count totals, the geographic split between North America and the rest of the world remained relatively stable over time. What that means, at this most abstract level, the U.S. and Canadian market rose and retreated at roughly the same relative pace as the rest of the world.

Of course, the “rest of the world” is a big place. Fortunes rise and fall with economic cycles. A decline in Chinese startup fundraising may be somewhat offset by gains in Latin America and Europe, and other markets around the world. Summed up and averaged out, though, the fact remains that North America still enjoys a plurality, if not a majority, of global venture deal volume through the end of the 2010s.

Projected VC Dollar Volume

Crunchbase projects that roughly $80.74 billion were invested worldwide in Q4 2019, up from last quarter but still below all-time highs set in 2018.

Like with deal volume, global venture dollar volume has plateaued in the past couple years, which is somewhat expected given how late into the current bull cycle we find ourselves today. Many of the most capital-hungry companies from the last decade have either already graduated to public markets or hit roadblocks which stymied growth and, accordingly, may simultaneously diminish the amount of capital they need from private-market investors and their likelihood of successfully securing said financing going forward.

How the world’s VC dollars get split geographically is changing over time.

At 39 percent in Q4 2019, North America’s share of global deal volume is the lowest it’s been since Q2 2018. And, much like deal volume over the slightly longer run, the majority of dollar volume is now raised outside North America. Because of the highly variable nature of large funding rounds (which can extend into the $100 million to $1 billion-plus range) the quarter-to-quarter fluctuations are more pronounced, but the overall trend is clear: startups in the rest of the world are raising more, and rising fast on the global stage.

Most Active Lead Investors

In any given round of startup funding, there’s often more than one investor involved, and not all investors have the same level of involvement in the deal. It’s typically the case that one investor – or sometimes two or three – will write a larger check than the other investors, and/or shoulder more of the burden of due diligence, term negotiation and the logistics of closing a deal.

Looking at the investors who have led the most deals over a given period of time is one way to identify some of the most active players in the venture game.

Most deals in Crunchbase’s funding rounds data list the investor(s) which led the transaction. In the chart below, we show the number of early and late-stage rounds led by the most active lead investors in the venture world in 2019 as a whole.

Note that this is based on a snapshot of Crunchbase’s funding rounds dataset at the time of writing. These numbers (and indeed the ranks) may shift over time as historical funding data is surfaced and added to Crunchbase. If you re-run these numbers at some point in the future, don’t be surprised if they’re a little different from what’s displayed below.

We didn’t count round leadership in angel and seed-stage deals either. Big accelerator programs like , and , among others, invest in dozens or hundreds of startups per year. Even though accelerators typically invest a de minimis amount of capital and often co-invest alongside syndicate partners, they’re traditionally listed as the round leaders because they originated the deal. Although we’ll show the most active seed-stage investors in a later section, we opted to exclude them here.

Otherwise, this list pretty much consists of “the usual suspects:” Sand Hill Road stalwarts, corporate investors from the U.S. and China, a handful of China-based firms and, of course, and its .

Between its primary and franchise operations in China and India, continues to be one of the most prolific investors on the planet. The firm has been on a fundraising tear, disclosing $3.35 billion in dry powder secured for funds aimed at in the U.S. as well as and investments in China, according to Crunchbase News coverage of SEC filings by Sequoia from December 2019.

Other investors in the most active ranks have also raised (or started raising) new funds this year.

Perhaps one of the bigger stories (and funds) to come out of 2019 was ’s , which topped out at $2 billion and was announced in May alongside $750 million for . It’s considered an important moment because the venture firm restructured itself as a . As we explained in our Q2 2019 Global VC Report, “The designation gives these firms more options to invest their LPs’ capital in search of outsized returns—at the expense of the relative freedom from regulatory oversight enjoyed by less-regulated venture capital funds.”

There were other funds raised as well:

• was perhaps the most prolific, announcing $525 million for , $500 million for , $1.5 billion for , $550 million for , and $575 million for , all between May and October.
• , a PE and late-stage venture investment firm, raised in November.
• In March, submitted a filing disclosing its intent to raise $3.6 billion for its 17th venture capital fund.
• filed to raise back in February.
• filed paperwork indicating it’s raising an undisclosed sum for what it’s calling its “” in September.

Stage-By-Stage Analysis of Q4 2019 VC Funding Trends

In our stage-by-stage analysis, we’ll start close to the entrepreneurial metal with seed-stage deals. From there, we’ll proceed up the capital stack, ending with the late-stage venture and pre-IPO private equity deals that typically cap off the financial histories of private companies before they graduate to raising from public markets.

Angel And Seed-Stage Deals

Deals at the angel and seed “stage” represent several types of transactions, including those labeled “pre-seed,” “seed,” “angel” and a subset of rounds under a certain dollar threshold from other transaction types including equity crowdfunding and convertible notes. For more information about how Crunchbase aggregates data for this report, check out the Methodology section at the end of this report and the Methodology page on Crunchbase News.

Crunchbase projects that 20,434 angel and seed-stage rounds took place in all of 2019, setting a new record for worldwide deal volume at this stage. Throughout 2019, Crunchbase projects that $15.7 billion was invested in angel and seed-stage deals, up 5.5 percent from the prior year.

As for the last quarter of the year, angel and seed-stage activity ended strong. Although deal volume is down from last quarter’s all-time high, dollar volume hit a new record. Crunchbase projects that approximately $4.47 billion was invested across 5,076 deals in Q4 2019.

Reported data from Crunchbase indicates that angel and seed-stage deals continue to grow in size as more capital flows upstream.

Even though we’re talking about relatively small dollar figures here, growth in seed-stage round size is remarkable. In part, it’s because seed stage has become something of a semantic mess, meaning that we’re calling some rounds seed that, in the past, might have been called something else.

Traditionally, seed rounds were small (usually less than $1.5 million-$2 million, depending on the market) and unpriced, meaning that companies weren’t assigned a valuation. It’s hard to put a price on a company which, at this stage, is often little more than a proof-of-concept with maybe a little bit of market validation. These days though, the definition of seed is changing and has come to include priced rounds and larger deals. Crunchbase News has documented a growing trend of “supergiant seed” rounds in the U.S., but it’s a global phenomenon. At the time of this writing, there were , worldwide, up from 324 in 2018, and 227 in 2017.

And here are some of the most active investors in angel and seed-stage deals, worldwide.

There are few surprises here. Many of the most active investors on this list are accelerator programs, which are in the business of investing in startups at scale. Y Combinator, with its increasingly huge batch sizes, tops this list, with (which bills itself as “The Accelerator VC”) and 500 Startups trailing behind in the ranks.

Note that the above is based on a snapshot of Crunchbase data captured at the beginning of January 2020. Seed-stage deals in particular are subject to reporting delays for many reasons: stealthy startups want to stay stealthy, small rounds may fail to garner press attention, and/or a company may not have yet created a Crunchbase profile and disclosed their funding history. Reporting delays are a factor in all sets of private market investment data, and the numbers (or even ranks) reported above are likely to change as historical deals get added to Crunchbase data over time.

Early-Stage Deals

Early-stage deals consist primarily of Series A and Series B rounds, with a subset of other round types included in the mix. (Again, for more information, check out the Methodology section at the end.)

Crunchbase projects a total of 9,892 early-stage deals were struck in 2019, worldwide. That’s down slightly, nearly 4.6 percent, from 2018’s projected high of 10,367 rounds. The past year saw a total of $48.95 billion in early-stage funding, according to Crunchbase projections. That’s up 6.25 percent from 2018’s projected total of $46.07 billion.

The world’s early-stage venture market closed out the year a little better than where it started, but still mostly flat. Crunchbase projects that $29.78 billion was invested across 2,480 deals in the fourth quarter.

Deal and dollar volume growth continue to accelerate outside North America. In Q4 2019, Crunchbase projects that 60.2 percent of the early-stage dollar volume and about 58.7 percent of the deal volume was invested in startups in the rest of the world – up from 51.9 percent and 54 percent, respectively, in Q4 2018.

With deal volume on a slight downtrend, the only reason dollar volume is growing is due to larger early-stage round sizes.

Although the changes from one quarter to the next may be a bit humdrum, a year-over-year comparison really shows the power of compounding growth. What’s interesting to look at here isn’t the average, which can be skewed by outliers, rather it’s the median, which measures the statistical midpoint of a distribution, in this case the set of early-stage rounds raised in any given quarter. In general, a rising median value over time suggests that, here, the number of companies raising early-stage rounds today may be lower but the amount of capital they do raise is higher than it was before.

Which firms were the most active investors in these deals? The chart below has some answers, displaying the count of rounds to which the most active investors committed capital. (Again, early-stage deals are subject to reporting delays and these numbers are likely to change as historical funding rounds are surfaced and added to Crunchbase over time.)

The chart above has a lot of big-name VCs near the top of the ranks. They’re many of the same firms listed earlier, in the Most Active Lead Investors section of this report.

What’s interesting about this chart is that it illustrates the business model of accelerator programs quite well. Accelerator programs typically get an outsized chunk of equity for the relatively small amount of money they invest in participating startups. Those startups that survive to raise a Series A are then typically obligated to include the accelerator in the next deal, pursuant to pro rata rights which come standard in most accelerators’ term sheets.

Many accelerator programs follow on through Series A or Series B, but rarely beyond that. Some programs, like Y Combinator, have dedicated funds earmarked for continued investment in later-stage alumni companies, and others may selectively form special purpose vehicles to back their biggest successes on a one-off basis. But, generally, it’s rare to see seed investor participation at later stages.

Late-Stage Deals

Late-stage deals include Series C, Series D, Series E and later letters down the alphabet, plus a subset of other round types. And, since Q4 2017, we’ve defined “technology growth” deals as the set of private equity deals struck with companies which previously raised a venture capital round. In both cases, late-stage venture and technology growth deals are typically meant to fund more mature companies as they either continue to grow or seek to stabilize prior to raising from public markets or seeking an acquirer.

Unlike in prior sections, which started with discussion of annual totals, we’ll start here with quarterly trends. In any given quarter, there aren’t that many of these deals. The projected 572 late-stage venture deals and 55 technology growth deals in Q4 2019 made up 7 percent and 0.7 percent, respectively, of total investment transaction volume last quarter. But the size of these deals, collectively, weighs heavily on the market. The roughly $42.35 billion in late-stage venture dollar volume for Q4 2019 represents about 52.4 percent of total projected dollar volume for the quarter. The $4.15 billion invested in Q4 2019’s technology growth deals accounts for 5.1 percent of dollar volume.

Relative to the start of the year, the global late-stage venture market ends 2019 in a slightly better position, but still significantly lower from the high-flying days of 2018.

The projected $42.35 billion in Q4 2019 late-stage venture dollar volume is nearly 13 percent lower than the same quarter’s total from last year. Q2 2019’s dollar volume total of $34.8 billion, the low-water mark this past year, is roughly $15.7 billion less than a projected $50.5 billion record set in Q2 2018.

Late-stage round sizes are roughly where they started at the beginning of the year. Average round size in Q4 2019 is up from the year’s low point in Q2 but is down relative to 2018.

Continuing the earlier theme of larger deal sizes throughout the market, we can see that median deal size at late stage continues to grow.

And here is the deal and dollar volume for technology growth. The relatively small number and variable size of these deals makes sussing out larger trends difficult, but we felt it was still worth sharing these numbers.

And, as promised, here are the annual numbers: 2,450 late-stage and technology growth deals occurred in 2019, according to Crunchbase projections, setting a new annual record. Gains in deal volume were relatively modest: up a projected 3.4 percent from the prior year.

Crunchbase projects that for all of 2019, a cumulative $165.78 billion was invested across late-stage and technology growth deals. Here we find full-year 2019’s only marked sequential decline: down $38.5 billion, or 18.8 percent, from 2018’s all-time high of $204.28 billion in combined late-stage venture and technology growth dollar volume.

Declines in 2019’s late-stage dollar volume is not attributable to a pullback in deal volume, but rather to a fairly significant decline in the average, but not the median, transaction size at this stage. Falling means and rising median deal size suggests that while late-stage and technology growth deals are getting slightly larger, as a “population,” there are fewer outliers on the very highest end of the dollar volume spectrum to skew means higher.

Who’s backing these deals? This will probably come as no surprise: some of the deepest pockets in the VC business.

Reporting delays are less pronounced at late stage, but these numbers may shift slightly as new data is added to Crunchbase over time.

Money Out

When it comes to investing paper gains are great, but realizing those capital gains is the goal. In the public stock market, it’s possible to enter and exit a position in milliseconds. In private investing markets, it can take weeks to negotiate and finalize a deal, and as much as a decade to actually see the upside (if there’s any) from any given investment.

Venture capitalists are tasked with investing money on behalf of their limited partners, the money behind the money. If you thought getting money into a company was a challenge, try getting it out. Initial public offerings (IPOs) and mergers and acquisitions (M&A) are the two traditional paths to liquidity for private market investors, and that’s what we’ll primarily focus on here.

It’s sometimes possible for early investors and employees to sell their shares on the secondary market, without an exit for the company as a whole, but these transactions typically go unreported and, accordingly, are rarely surfaced in private company funding data.

Venture-Backed Acquisitions

Exit by way of merger or acquisition is the most common path to liquidity for venture capital investors.

Here’s a chart plotting Crunchbase data for venture-backed acquisitions, through Q4 2019. This is based on data currently in Crunchbase, not based on projections.

For at least the past year, Crunchbase News has acknowledged the decline in M&A volume for venture-backed startups. We’ve observed this phenomenon on a quarterly scale, but it looks like the declines are now made manifest on an annual timescale. Between 2009 and 2018, the number of M&A transactions involving venture-backed startups on the sell side grew year by year.

Crunchbase lists 435 acquisitions of venture-backed companies in 2009. That number grew over the course of nine years to 1,521 transactions in 2018. The 1,453 transactions reported for all of 2019 marks not just the first annual decline in transaction volume; it comes in lower than the 1,473 transactions reported all the way back in 2016. Put more bluntly, data suggests that the startup acquisition market erased years of growth in 2019, which may leave companies (and their financial backers) with more limited exit opportunities going forward.

Initial Public Offerings

An exit onto public markets is the other traditional path to liquidity for private investors. There was a time when an IPO was the only way to go, but other ways to get shares in the portfolios of the public have emerged.

Direct listings are a trendy, if still seldom-used path to public markets. In the traditional IPO process, leadership from the company seeking to go public makes a pitch to investment banks which underwrite and syndicate the offering and manage the logistics. In an IPO, the company is raising money from its underwriters, and existing investors are given the opportunity to convert their private shares into publicly traded ones, which can be liquidated for cash following the customary lock-up period.

A direct listing largely involves the same process, but without the underwriting component of a traditional IPO transaction. The company may not raise fresh cash in a direct listing, but it has a first-hand role in setting the price at which retail investors get to buy in. And, importantly, it gives prior investors the liquidity they need to fulfill LP obligations, and employees the opportunity to cash out and buy a house, invest, or save.

Here’s a selection of notable IPOs from Q4 2019.

Conclusion

Private market investment grew to massive scale and dizzying speed over the past decade. Spurred on by technical innovation (smartphones, the scale-out of high-speed wireless networks, cloud computing, the commodification of machine learning, robotics, gene editing, etc.) and pushed by economic tailwinds (the longest sustained period of economic growth in modern history, low interest rates, tax regimes which favor the wealthy, etc.), a number of factors came together to make the 2010s one of the most exciting times to use, work with, and invest in new technology companies.

The new year, however, starts off somewhat rocky. Geopolitical instability in the Middle East, ecological disaster in Australia, the unresolved fate of the current U.S. presidential administration and ongoing indecision around Brexit all rang in 2020. Although any one of these factors is unlikely to affect the venture investment market directly, it’s important to remember the importance of sentiment. It’s funny how turmoil today affects the decision-making of investors who are ostensibly tasked with seeing years into the future, but VCs are people too. And that’s just how it is.

Whatever may come in the 2020s, it’s bound to be venturesome.

Methodology

The data contained in this report comes directly from Crunchbase, and in two varieties: projected data and reported data.

Crunchbase uses projections for global and U.S. trend analysis. Projections are based on historical patterns in late reporting, which are most pronounced at the earliest stages of venture activity. Using projected data helps prevent undercounting or reporting skewed trends that only correct over time. All projected values are noted accordingly.

Certain metrics, like mean and median reported round sizes, were generated using only reported data. Unlike with projected data, Crunchbase calculates these kinds of metrics based only on the data it currently has. Just like with projected data, reported data will be properly indicated.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events as reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

Glossary of Funding Terms

• Seed/Angel include financings that are classified as a seed or angel, including accelerator fundings and equity crowdfunding below $5 million.
• Early stage venture includes financings that are classified as a Series A or B, venture rounds without a designated series that are below $15M, and equity crowdfunding above $5 million.
• Late stage venture includes financings that are classified as a Series C+ and venture rounds greater than $15M.
• Technology Growth includes private equity investments with participation from venture investors.

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