Data Scout is LSA’s series that curates and draws meaning from third-party data. Running semi-weekly, it adds an analytical layer to the industry data that we encounter in daily knowledge building. For Localogy original data, see the separate Modern Commerce Monitor™️ series.
2019 was a record-setting year in public markets, especially in the tech sector. Four of tech’s Big Five have reached the “four-comma club” for $1 trillion valuations, as we recently examined. But the tech sector’s health (not to jinx anything) was also buoyed by private investment, most notably, US venture capital.
Specifically, 2019 deal value topped $135 billion for the second year in a row according to Pitchbook. It also reports that exit value exceeded $256 billion. Exit value is a trailing indicator — representing returns on previous investments — but it does serve as an incentive for VC activity, partially driving the 2019 surge.
The healthy total is also driven by both deal-flow (237) and escalating deal sizes. Seed is the new series A, and so on. Part of this is a trickle-down effect from abundant LP funding flowing to VC firms to invest. And that creates an oversupply of venture dollars looking for a home, which can shift the power balance.
That’s one way of saying that it’s a buyers market for capital, and it’s never been easier for startups to raise funds. That may or may not continue as exit potential is diminished in the post WeWork era. That of course could temper investor appetite at the VC and LP levels. But meanwhile, momentum seems strong.
It’s also worth pointing out that investor appetite in both private and public markets is returning to fundamentals. Unicorn valuations are giving way to metrics like ARR for investor salivation-triggers (arguably, as it should be). That bodes well for SMB Saas, given unit economics and ARR potential.
We’ll keep tracking signals that will impact SMB-related technologies. Meanwhile, for more color on 2019 activity, see the full set of Pitchbook data. The infographic is below for you to sink your teeth into.