U.S. investments and fundraising keep strong pace in Q2

Venture capitalists continued to pour money into U.S.-based startups in the second quarter, with about $30 billion flooding into young companies and the full year on target to be the third largest in history, according to two studies.

Investors held to their practice of writing large checks, with the average deal size rising to a near record $26.7 million, according to data from Thomson Reuters.

The quarter’s median deal size of $8 million was well above the average $6.1 million of the previous four quarters, according to Dow Jones VentureSource.

VentureSource found in a report released July 8 that VCs steered $31.6 billion into 1,416 deals over the three months, a slight decline in capital from the first quarter and 29 percent less than the fourth quarter of 2018, the largest investment quarter in history.

Data from Thomson Reuters shows the quarter at $29 billion, which ranks it as the sixth largest in history. Deal count in the period was 1,085, which was down 12 percent.

The quarter saw big transactions with GM Cruise, DoorDash, SpaceX, UiPath and Social Finance.

Source: Dow Jones VentureSource.

Two-thirds of the capital went to technology companies, with software and services companies reeling in $9.2 billion and internet-focused startups attracting $5.6 billion, according to the Thomson Reuters data. Life sciences companies received 16 percent of the investment total, with biotech companies accounted for $2.9 billion.

Through mid-year, investments were on track to closely match those of 2018, which trail only the peak dot-com year of 2000.

Behind the strong pace of investments is an improving exit market. The quarter saw 31 IPOs of venture-backed companies and 198 M&A deals of startups, VentureSource found. Among the top public offerings were those from Uber, Pinterest, Crowdstrike and Zoom Video Communications.

Q2 fundraising also kept at a steady pace, maintaining the heightened activity of recent quarters. VentureSource found 156 funds raised $12.4 billion, while Thomson Reuters data finds $14.3 billion raised for 146 funds.

Top funds of the previous three months include Andreessen Horowitz LSV Fund, Lightspeed Venture Partners Select Fund III, Third Rock Ventures V and Andreessen Horowitz Fund VI.

The Dow Jones VentureSource report is available online.