Venture capital investing slowed slightly in Q2 — but it’s still on pace to top a record 2018.
With the second quarter of 2019 at a close, the pace of venture capital investing slowed slightly and seemed to settle after a large decline in Q1 following a record Q4 2018. Despite a successive decrease from the previous quarter, I’m not ringing alarm bells. In fact, quite the opposite. We are already outpacing the record year we had in 2018, and the market is primed to ensure VC activity remains strong. However, there could be a canary in the coal mine — VC investment in China was down more than 75% this past quarter. It will be interesting to see if this has any correlation in the coming quarters for the US VC market or if it remains contained to the local Chinese market.
Nationally, venture-backed startups raised $29.3 billion in Q2, a 2% decrease from Q1. Perhaps most notably, we saw a 74% dip in investment dollars from the private equity sector — $1.2 billion in Q2 vs. $4.7 billion in Q1. We did see more mega-round investments take place, representing an increase of 19% over the previous quarter. The $12.7 billion raised from these deals accounted for 44% of all capital invested in Q2, only a slight decline from 50% in Q1.Despite the relative stability of the venture asset class, it’s important that we evaluate the factors contributing to changes quarter over quarter. Nationally, venture-backed start-ups raised $29.3 billion in Q2, a 2% decrease from Q1. Perhaps most notably, we saw a 74% dip in investment dollars from the private equity sector — $1.2 billion in Q2 vs. $4.7 billion in Q1.