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Venture Deals, Dollars Fall in Q4 2019; Biotech Stays Hot

Global venture capital investing

Venture capital dollar volumes and deals in 2019, by region. Click on image for full-size view. (MoneyTree report: PwC, CB Insights)

15 Jan. 2020. Venture capital deal-making in the U.S. declined in the fourth quarter of 2019, but biotechnology start-ups remained the most sought-after investment targets of any sector. Despite the quarterly decline, venture investment volumes in 2019 scored one of the highest annual totals in the past two decades, according to the MoneyTree Report, prepared by technology intelligence company CB Insights and consulting firm PwC.

In the U.S., both the number of venture deals and dollar volumes declined for the second straight quarter at the end of 2019. Venture-backed companies raised $23 billion in the fourth quarter of 2019, down from $27.4 billion in the third quarter, and $40 billion in the fourth quarter of 2018. The number of venture deals also declined in Q4 2019, to 1,324 from 1,481 in Q3, and 1,469 in July to September 2018.

Totaling up the annual numbers, however, the picture is not quite as bleak. In all of 2019, U.S. start-ups raised $108 billion in venture financing in 5,906 deals, down slightly from $118 billion raised in 2018. That $118 billion raised in 2018 was the highest annual investment volume total since the $119 billion raised in 2000, during the waning days of the dot-com era.

Start-up enterprises worldwide raised $46.1 billion in Q4 2019, in 3,803 deals. Companies in North America gained $24.2 billion in 1,432 deals, while Asian companies took in $13.5 billion in 1,381 deals, and European companies raised $7.1 billion in 842 deals. For all of 2019, start-ups globally raised $213 billion in 15,564 deals, with more than half of the dollar volume — $113 billion — gained in North America. Asian companies took in $63 billion in 2019, while European companies raised $32 billion.

Biotechnology remained the hottest single business sector in Q4 2019, attracting both the most investment dollars and number of venture deals for the second straight quarter. Among the broad business categories, however, Internet companies raised $10 billion of the $23 billion invested from October through December, as well as 574 or 43 percent of the 1,324 deals in the quarter. Within the Internet category, companies providing software as a service, abbreviated SaaS, such as for accounting or security, attracted the most venture dollars and deals.

Judging by the dollars raised in 2019, U.S. venture capital companies should have more money to invest in 2020. Venture investors collected $983 billion in 2019, nearly doubling the $544 billion raised in 2018. Among venture capital companies, Sequoia Capital raised the most investment dollars at $7.4 billion, followed by Andreesen Horowitz at $6.5 billion, then General Atlantic, Summit Partners, and Adams Street Partners, each gaining between $3.5 and $5.2 billion in 2019.

The list of companies receiving the most venture capital funding through 2019 includes household names like Airbnb, SpaceX, and SoFi. Topping that list, however, is a company featured a few times in Science & Enterprise, and not in a good way. Juul Labs in San Francisco, the leading maker of electronic cigarettes, so far raised $13.6 billion in venture funding. As we noted in our story last week, devices made by Juul are shown to send more nicotine in the blood streams of users than other e-cigarettes, and even ordinary combustible cigarettes. Second on the list is Airbnb with $3.6 billion raised.

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