Source of repost is EY website and for full Article: https://go.ey.com/2UyqOeB
2019 finishes as second strongest VC investment year on record
As the 2010s came to a close, we can say with confidence that we experienced the greatest 10-year run in history for entrepreneurs raising venture capital. Between 2010 and the end of 2019, venture-backed startups raised more than $730 billion, almost doubling the $400 billion raised in the prior decade. What can the trends of the last year – and the last decade – tell us about what’s to come?
Let’s look at what drove the massive growth spurt in funding over the past decade:
- An explosion in IT; software “eating the world”
- The availability of mobile computing bringing goods and services to consumers anytime, anywhere
- The technology enablement of industries — business and financial services boomed with the rise of FinTech
- Continued advances in health care, health services, and biopharmaceuticals
The environment was also shaped by a prolonged zero interest rate environment that saw investors seeking yield and turning to venture to get it. In an era of abundant private capital, companies raised significant amounts and poured that into topline growth, in some cases not building infrastructure or positive unit economics. This is now being viewed with more scrutiny, especially in the consumer-facing markets.
Read full article: https://www.ey.com/en_us/growth/2019-finishes-as-second-strongest-vc-investment-year-on-record
Disclosure: Please check the source as this is a reposting of the research by another company.
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When will unicorns need to raise next?
In order to answer the above question, we applied the overall median time between rounds to the date of unicorns’ last financing round. The graphic below helps illustrate our estimate for when most unicorns will need to raise next:
- 15 will likely need to raise sometime in Q2’16.
- 40+ US unicorns will likely need to raise funding in the final 6 months of 2016
It’s this traffic jam in the latter half of 2016 when the proverbial “poop might hit the apparatus with rotating blades”. These companies will either need to
- raise from private markets
- test the inhospitable public markets for an IPO
- find an acquirer
On option #3, it is worth remembering that acquirers have been slowing activity of late and many of these unicorns have priced themselves so high that a logical buyer doesn’t really exist. Of course, if the market has forced them to see reality and their valuations reset, perhaps there will be buyers?
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