Friday Letter: How best to gauge venture activity in 2020

Reports tell a different story than personal anecdotes, but it seems like there's no letup in 2020 for venture fundraising and deployment during a pandemic.

In a year like no other, it often feels fruitless to look at reports on venture activity and gauge a trend.

Nonetheless, since the covid-19 pandemic escalated in March and we went into lockdowns and quarantine mode, I’ve paid close attention to venture activity, from fundraising to deployment, to see how the VC community reacts and emerges from the new normal.

Unless you’re an emerging fund manager, you’ve seen little to no let up when it comes to fundraising. In fact, US fundraising activity has picked up as firms are on a record pace this year.

Deal activity, however, has not been so robust.

That’s according to a report by Carta this week. Yes, Carta, the venture-backed fintech company that helps investors and their portfolio companies manage their equity. The San Francisco company also issues quarterly reports on the private markets, including its Q3 report this week, which said that “early indications show deal volume still has not recovered” since the pandemic in Q1, as the overall number of deals decreased in Q3. Carta said the seeds of recovery are there, but the levels aren’t back at pre-covid levels.

In comparison, the PitchBook/NVCA report issued earlier in October said early-stage VC deal activity showed signs of rebounding in Q3 as late-stage activity continued to be resilient.

It’s comparing apples to oranges, I know. The reports have their differences.

Anecdotally, I hear something much more different and optimistic. Many firm managers I talk with tell me how they’re busier than ever, performing due diligence and putting money into deals. Some have told me they’re deploying more than they expected this year pre-covid because they’re generally finding deals are reasonably priced.

Venky Ganesan, a partner a Menlo Ventures, told me in August that the firm had done about six deals since March, a slightly more active pace than normal for the firm, which this month raised $500 million for its 15th fund.

Couple that with the recent uptick in exit activity – you know, the SPACs and IPOs – and well, it just seems that a pandemic and a recession can’t slow overall activity.

There’s too much capital chasing too many deals.

What happens in 2021 may be a different story.

What are your thoughts? Tell me what you think about how much venture firms are deploying capital and how the pace will extend into next year. I’m always happy to connect with investors and listen to thoughts and ideas. You can reach me at and I’m open to voice and video calls, of course.