RESEARCH TRIANGLE PARK – A new venture capital forecast for 2020 predicts that early-stage startups are likely to face a funding crunch.
“While valuations have been on the rise, seed-stage deal activity has declined steadily over the past five years. This could be indicative of a diminishing opportunity set and investor appetite at the earliest stages,” says PitchBook.
“Just as Founders Fund has shifted to the late stage with its latest vehicle, other seed investors may be finding that as firms stay private longer, their seed-stage investments have become too diluted.”
Other forecasts from the Venture Capital Outlook report include:
- The median pre-money valuation for seed-stage companies will eclipse $8.5 million (up from $7.5 million in 2010 and $7 million in 2018.)
- 2020 will mark a new annual record for US mega-deals.
- CVC [Corpoerate Venture Capital] activity will reach a new record in 2020.
- The median US VC fund size will top $110 million, reaching an all-time high.
- SoftBank’s second Vision Fund will not close at its target of $108.0 billion.
- At least three direct listings [as opposed to conventional IPOs] of VC-backed companies valued over $1 billion will close in 2020.