Morning Markets: A quick look back at the first quarter, now departed.
Yesterday the Crunchbase News team released an omnibus report on the Q1 2019 venture landscape. We fused our formerly-regular Global and North American reports into one, adding notes on how much money venture capitalists themselves raised in the process. The result is detailed and packed with information.
We’re still deciding how the new version came out as a lot of change went into it. Read it, and then email me1 if you have notes. The Q1 2019 report is one of the most complex pieces we’ve ever done, and I’m proud of that fact.
This morning I want to talk about a few data points from the report, and then note some public market facts to help ground ourselves as we ease into the second quarter. Let’s get our bearings.
Summing the entire report into a few words, global deal and dollar volume fell sharply from Q4 2018, but both managed modest gains from Q1 2018. The world’s venture landscape was sequentially down, but up year over year. The U.S. and Canada saw lower deal volume than what was recorded in Q4 2018, but dollar volume wound up being pretty good.
It was a somewhat mixed quarter compared to recent results, then, but still quite elevated from historical norms. Indeed, our reporting team wrote that “Crunchbase projects that just under $75 billion was invested in almost 8,100 funding rounds” in the first quarter. Regardless of how far that is off record highs, it’s still a pile of money.
A good question is what drove the dynamism implied from the figures. Apart from the Chinese late-stage market, there’s a lot of strength to be found around the world’s venture game, even as different stages (early, late, etc.) did variously well or not depending on the comparison period selected, and region in focus.
What stays with me from the report’s words and charts and figures is the whiff of continued optimism. This much money is still being deployed into startups during the year when unicorns born back when I was about to start college are only now going public? And as the New Unicorns aren’t precisely working towards the sort of P&L required to go public themselves, signs point towards an eventual unicorn pileup on the private side of the IPO fence (as expected). They’ll have to winter there, meaning that a lot of money being invested today won’t see an exit this cycle.
But investors are still funding startups large and small, domestic and not, at an incredible clip. There were over 100 $100 million rounds in the first quarter, for example. That’s down from 130 in Q4 2018, but it’s still a lot.
So it’s risk-on in the venture world.
It’s not only the private markets which are buoyant. As the second quarter gets into its groove, a key stock market metric has nearly recovered from the Late 2018 Scaries endured as October bled into November, which stumbled into a depressing December.
The Nasdaq, a critically watched tech barometer that helps set sentiment in the public and private tech markets, fell from over 8,000 into the low 6,000s before 2018 came to a close. Today it’s nearly back to 8,000, closing in above 7,900 as I write to you, even after shedding a few points during this morning’s trading.
All that bad luck that hit the stock market, dinging startups and public companies alike, has been effectively erased. Here’s what that looks like via a CNBC chart:
So it’s risk-on in the public tech world as well.
Risk-on in the private market for tech companies, and risk-on in the public markets as well. The only joke we can close on is that everyone’s risk-on, but there’s so much money that the thing that private and public investors covet (more strong IPOs) won’t happen nearly as often as would be needed to truly dent illiquid private market wealth.
Welcome to the second quarter. Want to bet it’s like the first?
Illustration: Li-Anne Dias.