Investor Amnesia in 3Q20 Sets Up Year-End Push…


This post is by ontheflyingbridge from On the Flying Bridge


Do you remember that the President was impeached earlier this year? Easy to forget amidst the pandemic, recession, stock market crash, then raging stock market bull, record low then record high unemployment, and a nasty presidential election. Head spinning. Through it all, the venture capital industry has shown extraordinary resilience with another terrific quarter – $37.8 billion invested in 2,288 companies.

Confoundingly, 3Q20 saw a strong, yet incomplete, financial resurgence alongside a staggering resurgence in COVID-19 cases; three days ago we saw an all-time daily high in cases. As cases surged over the last few months, the S&P 500 index increased 7.9% in 3Q20, while the NASDAQ was up 9.2%. U.S. large cap stock funds powered ahead 11.8%. On the heels of unprecedented job losses this spring, the unemployment rate is steadily improving – although too slowly for many and still miles from where we were pre-COVID.

According to National Venture Capital Association (NVCA) data, $112.3 billion has been invested in 7,891 companies year-to-date. One might have expected a pause this summer, but that did not happen. While the deal count is decreasing, the amount of capital invested continues to be quite robust. The size of the average investment in 2020 so far is $16.5 million, well ahead of the $11.7 million this time last year. Quite clearly, there is a greater proportion of Later stage deals and a greater number of large financings this year, perhaps signaling further concentration around fewer companies as well as a greater degree of (Read more…)