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PREQIN AND FIRST REPUBLICUPDATE: US VENTURE CAPITALIN Q1 2019

P R E Q I N A N D F I R S T R E P U B L I C U P D A T E : U S V E N T U R E C A P I T A L I N Q 1 2 0 1 9

2 © P r e q i n L t d . / w w w . p r e q i n . c o m

CONTENTS

3 F o r e w o r d

4 D e a l s & E x i t s

7 F u n d r a i s i n g

10 F u n d s i n M a r k e t

12 M i c r o V e n t u r e C a p i t a l

15 P e r f o r m a n c e

17 F u n d M a n a g e r s

19 I n v e s t o r s

Preqin partnered with First Republic Bank to prepare this information regarding US Venture Capital. This report is for information purposes only and is not intended as an offer, solicitation, advice (investment, legal, tax, or otherwise), or as the basis for any contract. First Republic Bank has not independently verified the information contained herein and shall not have liability to any third party in any respect for this report or any actions taken or decisions made based upon anything contained herein. This information is valid only as of April 2019 and neither Preqin nor First Republic Bank will undertake to update this report with regard to changes in market conditions, information, laws, or regulations after the date of this report. This report may not be further reproduced or circulated without the written permission of Preqin and First Republic Bank.

All rights reserved. The entire contents of Preqin and First Republic Update: US Venture Capital in Q1 2019 are the Copyright of Preqin Ltd. No part of this publication or any information contained in it may be copied, transmitted by any electronic means, or stored in any electronic or other data storage medium, or printed or published in any document, report or publication, without the express prior written approval of Preqin Ltd. The information presented in Preqin and First Republic Update: US Venture Capital in Q1 2019 is for information purposes only and does not constitute and should not be construed as a solicitation or other offer, or recommendation to acquire or dispose of any investment or to engage in any other transaction, or as advice of any nature whatsoever. If the reader seeks advice rather than information then he should seek an independent financial advisor and hereby agrees that he will not hold Preqin Ltd. responsible in law or equity for any decisions of whatever nature the reader makes or refrains from making following its use of Preqin and First Republic Update: US Venture Capital in Q1 2019. While reasonable efforts have been made to obtain information from sources that are believed to be accurate, and to confirm the accuracy of such information wherever possible, Preqin Ltd. does not make any representation or warranty that the information or opinions contained in Preqin and First Republic Update: US Venture Capital in Q1 2019 are accurate, reliable, up to date or complete. Although every reasonable effort has been made to ensure the accuracy of this publication Preqin Ltd. does not accept any responsibility for any errors or omissions within Preqin and First Republic Update: US Venture Capital in Q1 2019 or for any expense or other loss alleged to have arisen in any way with a reader’s use of this publication.

D O W N L O A D D A T A P A C K : w w w . p r e q i n . c o m / F R U S V C Q 1 1 9

3

FOREWORD

F ollowing a record 2018, venture capital activity in the US is off to a robust start: in the first quarter of 2019, 1,026 deals were completed for an aggregate $28bn, up from $19bn in Q1 2018. Continuing

the trend of mega-rounds, the top five deals of the quarter accounted for $6.2bn, or 22% of the total amount of venture capital invested. Some of this quarter’s highlights include:

■ Early-stage investments (Series A and earlier) accounted for 49% of venture capital deals and secured 20% of the aggregate capital invested in Q1 2019, and Series B investments constituted 23% of capital invested. Software represented 36% of deals and 28% of deal value, making it the most active industry for US-based venture capital investment in the quarter.

■ As of the end of Q1 2019, there were 129 exits valued at an aggregate $18bn, led by exits for Lyft, Auris Health and SendGrid. Ten venture capital-backed companies went public in Q1 2019 – and with the IPO window opening, many more companies are expected to file in 2019.

■ A record 405 US-based venture capital funds closed in 2018, raising $46bn. Based on Q1 2019’s fundraising statistics, 2019 is expected to be an equally strong year, and 96 funds have brought in an aggregate $12bn so far.

■ Marking a 22% increase from a year ago, there are a record 952 US-based venture capital funds in market at the start of Q2 2019, seeking an aggregate $89bn. Thirty-six percent of these funds are being raised by first-time managers and target $22bn.

■ The first quarter of 2019 alone recorded more micro venture capital fund closures than in 2009 (63 vs. 64 respectively), and four of the top seven performing US-based venture capital funds are micro vehicles. In 2018, 63% of the micro funds closed had managers with prior institutional investing experience, and in Q1 2019 that figure was up to 72% – though, it is worth noting that this number includes managers that raised a prior fund under the same brand (Fund II or later).

■ The 10 largest US-based venture capital fund managers have raised $73bn over the past 10 years. Although the top 10 US fund managers cover a range of investment stages, only Sequoia Capital and Bessemer Venture Partners have seed-stage-focused funds.

■ Six of the most active investors in US venture capital are pension funds, led by San Francisco Employees’ Retirement System which has 65 known commitments to vintage 2009-2019 venture capital funds. The largest proportion of investors active in US-based micro venture capital funds, however, are fund of funds managers and family offices.

MIKE SELFRIDGEChief Banking Officer, First Republic Bank



DEALS & EXITS

F ollowing a record 2018, venture capital activity in the US got off to a positive start in 2019: 1,026 deals were completed for an aggregate $28bn in Q1 2019 (Fig. 1), up from $19bn in Q1 2018, and the top five deals of the quarter

accounted for 22% ($6.2bn) of the total amount of venture capital invested in US-based portfolio companies.

Early-stage investments (Series A and earlier) accounted for 49% of venture capital deals in the US in Q1 2019 and 20% of capital invested, and Series B investments constituted 23% of capital invested

(Fig. 2). Software was the most active industry for US-based venture capital investment in the quarter, representing 36% of deals and 28% of deal value.

In Q1 2019, there were 129 venture capital-backed exits for US-based companies, valued at an aggregate $18bn (Fig. 5). The number of exits in Q1 2019 has declined compared to the same period last year (146); however, the aggregate exit value has increased compared to the exit value seen in Q1 2018 ($12bn).

As seen in previous periods, trade sales were the most common exit type in Q1 2019: they accounted

Fig. 1: Venture Capital Deals* for US-Based Companies, 2009 - Q1 2019

3,5034,189

5,0566,054 6,434 6,725

6,1735,361 5,104 5,272

1,026

0

20

40

60

80

100

120

01,0002,0003,0004,0005,0006,0007,0008,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019

No. of Deals Aggregate Deal Value ($bn)

Source: Preqin Pro

No. o

f Dea

lsAggregate Deal Value ($bn)

Fig. 2: Venture Capital Deals for US-Based Companies in Q1 2019 by Stage

23%26%

16%

9% 7%2% 1% 0%

9% 7%3%

17%

23%

13%

32%

3%0% 0%

4% 6%

0%

10%

20%

30%

40%

Ange

l/See

d

Serie

s A/R

ound

1

Serie

s B/R

ound

2

Serie

s C/R

ound

3

Serie

s D/R

ound

4an

d Late

r

Grow

th Ca

pital/

Expa

nsion Gr

ant

PIPE

Ventu

re De

bt

Add-

on &

Othe

r

No. of Deals

AggregateDeal Value

Source: Preqin Pro

Prop

ortio

n of T

otal

* Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases.


5

Portfolio Company Stage

Deal Date

Deal Size (mn)

Total Known Funding (mn) Investor(s)

Primary Industry

WeWork Companies Inc.** Unspecified Round Jan-19 2,000 USD 7,486 USD SoftBank Hotels and

Offices

OneWeb LLC Unspecified Round Mar-19 1,250 USD 3,400 USD Government of Rwanda, Grupo Salinas, Qualcomm Ventures, SoftBank Internet

Flexport, Inc. Unspecified Round Feb-19 1,000 USD 1,302 USD Cherubic Ventures, DST Global, Founders Fund, SB Investment Advisers, SF Express, Susa Ventures Software

Verily Life Sciences LLC Unspecified Round Jan-19 1,000 USD 1,800 USD Ontario Teachers' Pension Plan, Silver Lake Healthcare IT

Nuro, Inc. Unspecified Round Feb-19 940 USD 1,032 USD SB Investment Advisers High-Tech

Aurora Innovation, Inc. Series B/Round 2 Feb-19 530 USD 623 USD

Amazon.com, Inc., Geodesic Capital, Greylock Partners, Index Ventures, Lightspeed Venture

Partners, Reinvent, Sequoia Capital, Shell Ventures, T Rowe Price

High-Tech

Clover Health Inc. Series E/Round 5 Jan-19 500 USD 825 USD Greenoaks Capital Software

DoorDash, Inc. Series F/Round 6 Feb-19 400 USD 1,372 USDCoatue Management, Dragoneer Investment

Group, DST Global, GIC, SB Investment Advisers, Sequoia Capital, Temasek Holdings, Y Combinator

Internet

Neutron Holdings, Inc. Series D/Round 4 Feb-19 310 USD 777 USD

Alphabet, Andreessen Horowitz, Bain Capital Ventures, Bling Capital, Coatue Management,

DCM, Fidelity Investments, Fifth Wall Ventures, FJ Labs, GGV Capital, GIC, GR Capital, GSV Capital, GV, Institutional Venture Partners, St. Augustine

Capital Partners

Telecoms

Clear Creek Midstream Unspecified Round Jan-19 300 USD 300 USD EnCap Flatrock Midstream Oil & Gas

Source: Preqin Pro

Fig. 4: Largest Venture Capital Deals* for US-Based Companies in Q1 2019

for 81% of all venture capital-backed exits of US-based portfolio companies, as well as eight of the 10 largest exits for an aggregate $9.8bn, which was led by the $3.4bn trade sale of Auris Health, Inc. to Ethicon, Inc.

Ten venture capital IPOs took place in Q1 2019; headlining these was the much-anticipated IPO for Lyft, Inc. for $2.34bn, the third largest exit of the quarter (Fig. 6).

Fig. 3: Venture Capital Deals* for US-Based Companies in Q1 2019 by Industry

0%

10%

20%

30%

40%

Softw

are &

Relat

ed

Healt

hcare

Intern

et

Othe

r IT

Telec

oms

Food

& Ag

ricult

ure

Cons

umer

Discr

etion

ary

Busin

ess S

ervice

s

Indus

trials

Othe

r

No. of Deals Aggregate Deal Value

Source: Preqin Pro

Prop

ortio

n of T

otal

* Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases.** Softbank is a recurring investor in WeWork Companies. The capital invested by Softbank did not come from its ‘Vision’ fund. US-based investor



Portfolio Company

Initial Investment

Date Investors (Entry)

Total Known Funding

(mn)Exit Type

Exit Date

Acquiror (Exit)

Exit Value (mn)

Primary Industry

Auris Health, Inc. Jun-09

Coatue Management, D1 Capital Partners, Highland Capital, Highland Capital Partners, Lux Capital

Management, Mithril Capital Management, NaviMed Capital, Partner Fund Management, Section 32,

Senator Investment Group, Viking Global Investors, Wellington Management

783 USDTrade Sale

Feb-19 Ethicon, Inc. 3,400 USD Healthcare

SendGrid, Inc. Aug-09

500 Startups, Bain Capital Ventures, Bessemer Venture Partners, Founders Fund, Foundry Group,

Highway 12 Ventures, TechStars, Techstars Ventures, Uncork Capital

80 USDTrade Sale

Jan-19 Twilio, Inc. 3,000 USD Software

Lyft, Inc. Jul-08

AB, Alibaba Group, Andreessen Horowitz, AutoTech Ventures, Baillie Gifford, CapitalG, Chromo Invest,

Coatue Management, Didi Chuxing, Facebook, Fidelity Management & Research Company, Flat World Partners, Floodgate, Fontinalis Partners,

Fortress Investment Group, Founders Fund, General Motors, Glade Brook Capital Partners, Graphene Ventures, Icahn Enterprises, InMotion Ventures,

Janus Capital Group, K9 Ventures, Kingdom Holding Company, KKR, Machine Shop Ventures,

Magna International, Mayfield, Olympus Partners, Ooga Labs, Public Sector Pension Investment

Board, Rakuten, Inc., Senator Investment Group, SharesPost, Tencent, Third Point Management,

UTA Capital

4,913 USD IPO Mar-19 - 2,340 USD Telecoms

Chrome River Technologies, Inc.

May-12 Argentum, Argentum Group, Bain Capital Ventures,

First Analysis, Great Hill Partners152 USD Merger Mar-19

Certify, Inc./Chrome River Technologies,

Inc.

1,000 USD Software

Nginx Software, Inc.

Oct-11e.ventures, Goldman Sachs Merchant Banking

Division, Index Ventures, MSD Capital, New Enterprise Associates, Runa Capital, Telstra Ventures

84 USDTrade Sale

Mar-19 F5 Networks 670 USD Software

Source: Preqin Pro

Fig. 6: Largest Venture Capital-Backed Exits of US-Based Companies in Q1 2019

Fig. 5: Venture Capital-Backed Exits of US-Based Companies by Type, 2009 - Q1 2019

0

20

40

60

80

100

0

200

400

600

800

1,000

1,200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019

IPO Sale to GP Trade Sale Write-off Aggregate Exit Value ($bn)

Source: Preqin Pro

No. o

f Exit

sAggregate Exit Value ($bn)

US-based investor/acquiror


7

FUNDRAISING

Fund Firm Fund Size (mn) Fund Type Geographic Focus

Technology Crossover Ventures X Technology Crossover Ventures 3,000 USD Expansion/Late Stage Europe, North America, US

Flagship Pioneering Special Opportunities Fund II Flagship Pioneering 824 USD Venture Capital (General) US

Kleiner Perkins Caufield & Byers XVIII Kleiner Perkins Caufield & Byers 600 USD Early Stage US

Accel XIV Accel 525 USD Early Stage US

Accel Leaders Fund II Accel 500 USD Venture Capital (General) Global, US

Eclipse Ventures Fund III Eclipse Ventures 500 USD Early Stage US

The Inflection Fund Menlo Ventures 500 USD Expansion/Late Stage US

MPM BioVentures 2018 MPM Capital 400 USD Venture Capital (General) Global, US

Lightspeed China Partners IV Lightspeed Venture Partners 360 USD Venture Capital (General) China

5AM Ventures VI 5AM Ventures 350 USD Seed US

Source: Preqin Pro

Fig. 8: Largest US-Based Venture Capital Funds Closed in Q1 2019

Arecord 405 US-based venture capital funds closed in 2018, raising an aggregate $46bn. Based on Q1 2019’s fundraising statistics, 2019 is poised to be an equally strong year, with 96 funds bringing in an aggregate $12bn

in the first quarter (Fig. 7).

Technology Crossover Ventures was the only US-based venture capital firm to close a mega fund* in Q1 2019 (Fig. 8). Despite this, the 10 largest funds closed were all raised by experienced managers,

many of which raise multiple funds concurrently instead of one large, flagship vehicle. For example, Accel closed Accel Growth Fund V in Q1 2019 in addition to its two venture capital funds, Accel XIV and Accel Leaders Fund II, securing a total $2.5bn.

US-based venture capital funds spent around 17 months in market in 2018, which is generally average for venture capital fundraising over the past decade (Fig. 10). Managers have successfully planned their fundraising strategies: the average fund achieved

Fig. 7: Annual US-Based Venture Capital Fundraising, 2009 - Q1 2019

119125

130172

212282 291

374 360 405

96

0

10

20

30

40

50

0

100

200

300

400

500

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019

No. of Funds Closed Aggregate Capital Raised ($bn)

Source: Preqin Pro

No. o

f Fun

ds Cl

osed

Aggregate Capital Raised ($bn)

Year of Final Close

* Preqin defines ‘mega funds’ as vehicles that secure $1bn or more.



101% of its targeted amount in 2018, and 99-102% of its target each year since 2014.

Venture capital funds focused on seed investments are the least common, with only 10% of funds closed in Q1 2019 dedicated to this investment stage (Fig. 11). Meanwhile, only five expansion-stage funds managed to secure a third of all capital raised in the first quarter, thanks to the closure of Technology Crossover Ventures X ($3.0bn) and The Inflection

Fund ($500mn), two of the largest funds closed in the quarter.

Almost all (95% of) US-based venture capital funds closed in the past three months are focused on domestic investments (Fig. 12); however, veteran manager Lightspeed Venture Partners closed a set of China-focused funds bringing in $560mn, representing a significant portion of the capital raised to invest abroad.

Fig. 9: US-Based Venture Capital Funds Closed by Size, 2009 - Q1 2019

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019

$1bn or More

$500-999mn

$250-499mn

$100-249mn

$50-99mn

Less than $50mn

Source: Preqin Pro

Prop

ortio

n of F

unds

Clos

ed

Year of Final Close

Fig. 10: US-Based Venture Capital Fundraising Success, 2009 - 2018

1720

1214

1714

1920

1617

0%

20%

40%

60%

80%

100%

120%

0

5

10

15

20

25

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Average Time Spent on Road (Months) Average Proportion of Target Size Achieved

Source: Preqin Pro

Aver

age T

ime S

pent

on Ro

ad (M

onths

)Average Proportion of Target Size

Achieved

Year of Final Close


9

Fig. 12: US-Based Venture Capital Funds Closed in Q1 2019 by Primary Geographic Focus

95%

1%

N O R T H A M E R I C A

A F R I C A

A S I A

M I D D L E E A S T& I S R A E L

Source: Preqin Pro

Fig. 11: US-Based Venture Capital Fundraising in Q1 2019 by Strategy

9

32

5

45

0.7

3.7 3.73.3

0

1

2

3

4

0

10

20

30

40

50

Seed Early Stage Expansion/Late Stage Venture Capital (General)


Source: Preqin Pro

No. o

f Fun

ds Cl

osed


2%

1%

1%

A U S T R A L A S I A

E U R O P E0%



FUNDS IN MARKET

Fig. 13: US-Based Venture Capital Funds in Market over Time, 2009 - 2019

229175 141

162 183303 347

475563

780

952

0

20

40

60

80

100

0

200

400

600

800

1,000

Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19

No. of Funds Raising Aggregate Capital Targeted ($bn)

Source: Preqin Pro

No. o

f Fun

ds Ra

ising

Aggregate Capital Targeted ($bn)

Marking a 22% increase from this time last year, there are a record 952 US-based venture capital funds in market in April 2019 seeking an aggregate $89bn (Fig. 13). Thirty-six percent of these funds are

being raised by first-time managers and are targeting a total of $22bn, a slight decrease from the proportion of first-time funds one year ago when 39% of all US-based venture capital funds sought $17bn.

Eleven funds in market are mega funds targeting $1bn or more, comprising 26% of the total capital sought by all US-based venture capital funds on the road. At the head of these mega funds is the newly announced SoftBank Innovation Fund, which is poised to break the record for the largest US-headquartered venture capital fund ever raised with a target of $5bn (Fig. 16). If SoftBank reaches its target, it would dethrone Tiger Global Private Investment Partners XI which raised $3.8bn in Q4 2018.

Fig. 14: US-Based Venture Capital Funds in Market by Strategy

97

429

53

373

4.4

24.5

11.9

48.5

0

10

20

30

40

50

60

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100

200

300

400

500

Seed Early Stage Expansion/Late Stage Venture Capital (General)


Source: Preqin Pro. Data as of April 2019

No. o

f Fun

ds Ra

ising



11

Fund Firm Target Size (mn) Fund Type Geographic Focus

SoftBank Innovation Fund Softbank Latin America Ventures 5,000 USD Venture Capital (General)Argentina, Brazil, Central

America, Chile, Colombia, Mexico, South America

New Enterprise Associates 17 New Enterprise Associates 3,600 USD Venture Capital (General) US

The Rise Fund II TPG 3,500 USD Venture Capital (General) Emerging Markets,North Africa, South Asia

Deerfield Private Design Fund IV Deerfield Management 2,500 USD Venture Capital (General) Asia, Europe, Global, North America

NovaQuest Pharma Opportunities Fund V NovaQuest Capital Management 1,500 USD Venture Capital (General) Europe, US

Vivo Capital Fund IX Vivo Capital 1,500 USD Expansion/Late Stage China, US

Sequoia Capital China Yuan Fund Sequoia Capital 10,000 CNY Venture Capital (General) China

Vy Capital Holdings Vy Capital 1,200 USD Venture Capital (General) US

Khosla Ventures VI Khosla Ventures 1,000 USD Venture Capital (General) US

OrbiMed Private Investments VII OrbiMed Advisors 1,000 USD Venture Capital (General) Europe, North America, US, West Europe

Y Combinator Continuity Affiliates Fund I Y Combinator 1,000 USD Expansion/Late Stage US

Source: Preqin Pro. Data as at April 2019

Fig. 16: Largest US-Based Venture Capital Funds in Market

Fig. 15: US-Based Venture Capital Funds in Market by Primary Geographic Focus

879

11 35 27

73.6

1.1 4.69.9

01020304050607080

0100200300400500600700800900

North America Europe Asia Rest of World



No. o

f Fun

ds Ra

ising


Funds taking a stage-agnostic investment approach are dominating the fundraising market: 373 vehicles are targeting an aggregate $49bn, 54% of the total capital sought (Fig. 14). The current pool of funds in market has an average fund size of $115mn – a 12% increase from April 2018 ($103mn).

While US-based venture capital funds continue to primarily focus on domestic investments, large funds such as SoftBank Innovation Fund and The Rise Fund II, which concentrate on opportunities in Latin America and emerging markets respectively, are raising the profile of emerging markets investment in the venture capital industry.



MICRO VENTURE CAPITAL

Over the past decade, US-based micro venture capital funds (those worth less than $100mn) have gained traction in the market. In addition to the increasing number of micro venture capital funds

reaching a final close, the aggregate capital secured by these funds has steadily risen each year, reaching a record $7.4bn across 268 vehicles in 2018 (Fig. 17). In the first quarter of 2019 alone, 64 micro venture capital funds closed, neatly surpassing the 63 micro venture funds closed during the entirety of 2009.

A trend is visible among the micro venture capital funds closing each year, whereby experienced managers are raising these vehicles more often than first-time managers looking to make a name for themselves. Among funds closed in 2011, the split between micro funds that were raised by experienced and first-time managers was an even 50% – but in 2018, 63% of micro funds closed were managed by experienced firms, and in Q1 2019 that figure was up to 72%. This shows that there is a clear place for smaller funds within the offerings of larger venture capital fund managers.

Fig. 18: US-Based Micro Venture Capital Fundraising Success, 2009 - 2018

1820

1417 17 16

19 2016

19

0%

20%

40%

60%

80%

100%

120%

0

10

20

30

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Average Time Spent on Road (Months) Average Proportion of Target Size Achieved

Source: Preqin Pro

Aver

age T

ime S

pent

on Ro

ad (M

onths

)Average Proportion of Target Size

Achieved

Fig. 17: Annual US-Based Micro Venture Capital Fundraising, 2009 - Q1 2019

63 71 74105

145189 175

246 240268

64

0

2

4

6

8

10

0

50

100

150

200

250

300

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019


Source: Preqin Pro

No. o

f Fun

ds Cl

osed


Year of Final Close

Year of Final Close


13

Early-stage funds, including seed funds, account for 64% of US-based micro venture capital funds in market and 66% of targeted capital. General venture capital investing follows, with 199 vehicles in the market target an aggregate $9.1bn (Fig. 20). North America is the targeted destination for the majority (76%) of US-based micro venture capital funds on the road, followed by Asia (14%, Fig. 21).

With a net IRR of 129.0%, CRCM Opportunity Fund is the current top performing US-based micro venture capital fund over the 2008-2016 vintage range

(Fig. 22). Managed by CRCM Ventures, the fund implements a diversified approach and, like seven of the top 10 performing US-based micro venture capital funds, targets early-stage investments.

Investor TypeNo. of Known Commitments

Active VC Mandate?

Retirement Plans of Duke University Private Sector Pension Fund 14 No

Grantham Foundation Foundation 9 No

New York State Common Retirement Fund Public Pension Fund 9 No

Cendana Capital Private Equity Fund of Funds Manager 8 Yes

Industry Ventures Private Equity Fund of Funds Manager 8 No

Kapor Center for Social Impact Foundation 8 No

Commonwealth Financing Authority of Pennsylvania Government Agency 7 No

Prudential Financial Insurance Company 7 No

Sobrato Family Holdings Single-Family Office 7 No

Goldhirsh Foundation Foundation 6 No

Naver Corporate Investor 6 No

TIFF Private Equity Fund of Funds Manager 6 Yes

University of Texas Investment Management Company Endowment Plan 6 No

Source: Preqin Pro

Fig. 19: Most Active US-Based Micro Venture Capital Investors by Number of Known Fund Commitments (Vintages 2009-2018)



Fund Firm VintageFund Size

(mn) Fund TypeGeographic

FocusNet IRR

(%)Date

Reported

CRCM Opportunity Fund CRCM Ventures 2013 38 USD Early Stage: Start-up DiversifiedMulti-Regional 129.0 31-Dec-18

Foresite Capital Fund I Foresite Capital 2012 100 USD Expansion/Late Stage US 66.5 31-Mar-18

Vertical Venture Partners Fund I Vertical Venture Partners 2014 51 USD Early Stage: Start-up US 65.8 30-Sep-18

Revel Venture Fund I Revel Partners 2011 10 USD Early Stage: Seed US 58.7 31-Dec-16

IA Venture Strategies Fund I IA Ventures 2010 50 USD Early Stage US 51.0 30-Sep-18

Social Leverage Capital Fund II Social Leverage Capital 2015 20 USD Venture Capital

(General) US 48.4 31-Dec-18

Cottonwood Technology Fund I Cottonwood Technology Fund 2010 20 USD Early Stage: Start-up US 46.0 31-Dec-18

Brightstone Venture Capital Fund Brightstone Venture Capital 2013 20 USD Venture Capital

(General) US 45.0 30-Sep-18

Cervin Ventures II Opportunities Fund Cervin Ventures 2016 14 USD Early Stage US 43.5 30-Sep-18

500 Durians II 500 Startups 2016 27 USD Early Stage: Seed Asia 43.1 30-Jun-18

Source: Preqin Pro

Fig. 22: Top Performing US-Based Micro Venture Capital Funds (Vintages 2008-2016)

Fig. 20: US-Based Micro Venture Capital Funds in Market by Strategy

80

303

15

1997.5

11.9

0.8

9.1

0

2

4

6

8

10

12

0

50

100

150

200

250

300

350

Seed Early Stage Expansion/Late Stage

VentureCapital

(General)



Fig. 21: US-Based Micro Venture Capital Funds in Market by Primary Geographic Focus

557

5 19 16

22.1

2.24.1

0.90

5

10

15

20

25

0

100

200

300

400

500

600

NorthAmerica

Europe Asia Rest of World



No. o

f Fun

ds Ra

ising



No. o

f Fun

ds Ra

ising


15

PERFORMANCE

It has been a very strong decade of performance for US venture capital funds, and the home-run-hitting nature of the asset class means that strong performance is clear at the very top. Column Group II leads the way for vintage 2008-2016

US-based venture capital funds, with a substantial net IRR of 408.0% (Fig. 25). The early-stage fund targets investments in the biotechnology industry and received commitments from Hartford HealthCare Pension and Endowment Fund, Regents of the University of California and Texas County & District Retirement System.

Returns in the venture capital industry typically range far across the size spectrum. Among the top seven performing US-based venture capital funds, four are micro venture capital, three are early-stage vehicles and one targets late-stage investments.

US-based venture capital funds have performed well over the vintage range displayed in Fig. 23, consistently posting double-digit median net IRRs from vintage 2010 through 2016. This is a strong bounceback for the asset class since the Global Financial Crisis, with five of the available seven vintage years from 2010 onwards posting median IRRs upwards of 15%.

As a result of strong performance, venture capital managers have rewarded their investors with great liquidity over the past few years. In fact, US-based managers distributed a record $57bn in 2016, having called up only $38bn over the same period (Fig. 24). This marks one of seven years since 2007 in which venture capital has returned a positive cash flow to its investors, with average distributions of $34bn to LPs each year since 2010.

Fig. 23: US-Based Venture Capital Funds: Median Net IRRs and Quartile Boundaries by Vintage Year

-10%

0%

10%

20%

30%

40%

2008 2009 2010 2011 2012 2013 2014 2015 2016

Top Quartile Net IRR Boundary Median Net IRR Bottom Quartile Net IRR Boundary

Source: Preqin Pro

Net IR

R sinc

e Inc

eptio

n

Vintage Year



Fund Firm VintageFund Size

(mn) Fund TypeGeographic

FocusNet IRR

(%)Date

Reported

Column Group II The Column Group 2014 322 USD Early Stage US 408.0 31-Mar-18

CRCM Opportunity Fund CRCM Ventures 2013 38 USD Early Stage: Start-up Diversified Multi-Regional 129.0 31-Dec-18

Foresite Capital Fund I Foresite Capital 2012 100 USD Expansion/Late Stage US 66.5 31-Mar-18

Vertical Venture Partners Fund I Vertical Venture Partners 2014 51 USD Early Stage: Start-up US 65.8 30-Sep-18

DCM Hybrid RMB Fund DCM 2011 150 USD Venture Capital (General) Asia 65.4 30-Jun-18

DCM Ventures China Fund (DCM VII) DCM 2014 330 USD Venture Capital (General) Asia 62.6 30-Jun-18

Revel Venture Fund I Revel Partners 2011 10 USD Early Stage: Seed US 58.7 31-Dec-16

Flagship Ventures Fund IV Flagship Pioneering 2010 269 USD Venture Capital (General) US 56.4 31-Dec-17

OrbiMed Private Investments V OrbiMed Advisors 2013 735 USD Venture Capital (General) US 56.1 30-Sep-18

Spark Capital II Spark Capital 2008 360 USD Early Stage: Start-up US 51.6 30-Sep-18

Source: Preqin Pro

Fig. 25: Top Performing US-Based Venture Capital Funds (Vintages 2008-2016)

Fig. 24: US-Based Venture Capital Funds: Annual Amount Called up, Distributed and Net Cash Flow,2007 - H1 2018

26 25 2125 29 27

23

36 36 3844

2028

12

2334

2331

25

3930

57

34

23

-20-10

0102030405060

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 H1 2018

Capital Called up ($bn) Capital Distributed ($bn) Net Cash Flow ($bn)

Source: Preqin Pro


17

FUND MANAGERS

T he 10 largest US-based venture capital fund managers have collectively raised $73bn over the past 10 years (Fig. 24); eight of these fund managers are based in California and two are headquartered in New York. A new entry to

this elite list is Technology Crossover Ventures, which leapt into seventh position thanks to its $3bn close on Technology Crossover Ventures X in January 2019.

Although the top 10 US fund managers cover a range of investment stages, only Sequoia Capital and Bessemer Venture Partners have seed-stage-focused funds. This disparity is reflected in the aggregate capital raised in Q1 2019: just 6% of the $12bn raised is for seed investments, while the remaining 93% of capital is divided nearly equally among fundraising for early stage ($3.8bn), expansion ($3.7bn) and general venture capital ($3.8bn, Fig. 28). The $0.7bn raised for seed funds in Q1 2019 marks the largest proportion of

quarterly funding these funds have ever received, four percentage points greater than the 2% recorded in 2014. US-based seed fundraising, the smallest capital market share, has raised $10bn over the past 10 years – a fraction of the $148bn that general venture capital funds have amassed since 2009.

New York-based Tiger Global Management is estimated to hold the largest amount of dry powder ($4.3bn) of all US-based venture capital firms (Fig. 27). The firm invests in both public and private markets across the globe, with its venture capital exploits focused on early-stage and growth investments across a range of sectors. In total, the top 10 firms account for over $28bn of venture capital dry powder as of April 2019.

US-based venture capital firms owned by women have raised $10bn over the past decade, $637mn

Fig. 26: Largest US-Based Venture Capital Fund Managers by Aggregate Capital Raised in the Last 10 Years

Firm Headquarters

Total Funds Raised in Last 10

Years ($bn)

Tiger Global Management New York, NY 13.0

New Enterprise Associates Menlo Park, CA 11.5

Sequoia Capital Menlo Park, CA 10.2

Andreessen Horowitz Menlo Park, CA 6.5

Kleiner Perkins Caufield & Byers Menlo Park, CA 6.1

Lightspeed Venture Partners Menlo Park, CA 5.9

Technology Crossover Ventures Menlo Park, CA 5.5

Bessemer Venture Partners Larchmont, NY 5.1

Accel Palo Alto, CA 4.9

GGV Capital Menlo Park, CA 4.7

Source: Preqin Pro

Fig. 27: Largest US-Based Venture Capital Fund Managers by Estimated Dry Powder

Firm HeadquartersEstimated Dry Powder ($bn)

Tiger Global Management New York, NY 4.3

Technology Crossover Ventures Menlo Park, CA 4.3

Sequoia Capital Menlo Park, CA 3.6

Apple Advanced Manufacturing Fund Cupertino, CA 2.9

Lightspeed Venture Partners Menlo Park, CA 2.7

New Enterprise Associates Menlo Park, CA 2.3

Accel Palo Alto, CA 2.2

GGV Capital Menlo Park, CA 2.0

Bessemer Venture Partners Larchmont, NY 1.9

Norwest Venture Partners Palo Alto, CA 1.8

Source: Preqin Pro



Fig. 28: Aggregate Capital Raised by US-Based Venture Capital Fund Managers by Strategy in Q1 2019

0.7

3.8 3.7 3.8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Seed Early Stage Expansion/Late Stage Venture Capital (General)Source: Preqin Pro

Aggre

gate

Capit

al Ra

ised (

$bn)

Firm Headquarters Total Funds Raised in Last 10 Years ($mn)

Scale Venture Partners Foster City, CA 1,290

Oak HC/FT Partners Greenwich, CT 1,100

Greycroft Partners New York, NY 799

Forerunner Ventures San Francisco, CA 663

DBL Partners San Francisco, CA 551

Biomatics Capital Partners Seattle, WA 500

Canvas Ventures Portola Valley, CA 475

Arboretum Ventures Ann Arbor, MI 433

.406 Ventures Boston, MA 392

Floodgate Palo Alto, CA 356

Source: Preqin Pro

Fig. 29: Largest US-Based Women-Owned Venture Capital Firms by Aggregate Capital Raised in the Last 10 Years

of which is seed-stage capital. The top 10 US-based, women-owned firms have raised $6.6bn of the $10bn raised by such firms (Fig. 29), primarily through multi-stage and early stage strategies.

Expansion/late-stage funding reveals a gap not seen in the overall market. Although there is one

expansion-stage fund currently on the road managed by a women-owned firm, Pear VC’s Pear Ventures I Expansion, no women-owned firm has closed an expansion-stage fund since StarVest Partners II’s $244mn close in 2009.


19

INVESTORS

Six of the most active investors in US venture capital are pension funds, led by San Francisco Employees’ Retirement System which has 65 known commitments to vintage 2009-2019 venture capital funds (Fig. 30).

The largest proportion of investors active in US-based micro venture capital funds, however, are private equity fund of funds managers – tied with eight known commitments, Cendana Capital and Industry Ventures are the largest. Of all investor types with known commitments to US venture capital, foundations make up 19% of all investors and fund of funds managers just 8%.

Over 15 different LP types commit to US-based venture capital funds of vintages 2009-2019; foundations account for the largest proportion (19%),

followed by private sector (14%) and public pension funds (13%, Fig. 32).

As in Q4 2018, the majority (79%) of investors in US-based venture capital funds are located in North America (Fig. 31), which is no surprise given the historical preference for domestic venture capital managers among investors based in the region. This is followed by Europe (10%), Asia (9%) and Rest of World (2%). The majority (70%) of investors in US-based venture capital have less than $10bn in assets under management, with only 6% managing $100bn or more (Fig. 33). US-based venture capital firms continue to attract larger and more sophisticated investors compared to managers in other regions, reinforcing the strong preference for the market in North America.

Investor TypeNo. of Known Commitments

Active VC Mandate?

San Francisco Employees' Retirement System Public Pension Fund 65 No

MetLife Insurance Company Insurance Company 53 Yes

Texas County & District Retirement System Public Pension Fund 50 No

Retirement Plans of Duke University Private Sector Pension Fund 49 No

University of Texas Investment Management Company Endowment Plan 48 No

University of Michigan Endowment Endowment Plan 46 No

Alaska Permanent Fund Corporation Sovereign Wealth Fund 46 Yes

Liberty Mutual Retirement Benefit Plan Private Sector Pension Fund 44 No

Los Angeles Fire and Police Pension System Public Pension Fund 42 No

Sherman Fairchild Foundation Foundation 40 No

Industry Pension Insurance Private Sector Pension Fund 40 No

Source: Preqin Pro

Fig. 30: Most Active Investors in US-Based Venture Capital Funds by Number of Known Fund Commitments (Vintages 2009-2019)



Fig. 31: Investors in US-Based Venture Capital Funds by Investor Location (Vintages 2009-2018)

79% 10%

2%

N O R T H A M E R I C AE U R O P E

A S I A

D I V E R S I F I E DM U L T I - R E G I O N A L

9%

Source: Preqin Pro

Fig. 32: Investors in US-Based Venture Capital Funds by Investor Type (Vintages 2009-2018)

19%

14% 13%9% 8% 8% 8% 7%

4% 3%

8%

0%

5%

10%

15%

20%

25%

Foun

datio

n

Priva

te Se

ctor

Pens

ion Fu

nd

Publi

c Pen

sion

Fund

Endo

wmen

t Plan

Insura

nce

Comp

any

Fund

of Fu

nds

Mana

gers

Corp

orate

Inve

stor

Priva

te Eq

uity F

irm

Gove

rnmen

tAg

ency

Inves

tmen

tCo

mpan

y

Othe

r

Source: Preqin Pro

Prop

ortio

n of In

vesto

rs

Fig. 33: Investors in US-Based Venture Capital Funds by Assets under Management (Vintages 2009-2018)

24%

9%

37%

18%

6% 6%

0%

10%

20%

30%

40%

Less than $500mn $500-999mn $1-9.9bn $10-49.9bn $50-99.9bn $100bn or More

Source: Preqin Pro

Prop

ortio

n of In

vesto

rs

[email protected]

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