Venture Capital Benchmark

Q3 2020

North America, Europe and Latin America.

Welcome To the Status 
of Venture Capital Report 
Q3 2020

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

Here, we break down the VC activity in North America, Europe and Latin America and what it means for you as an investor or founder.

After going through market intelligence from the industry's most trusted sources, here’s the topline review of what went down in the VC world last quarter…

But first

Did you know that SPAC volumes have almost caught up to traditional IPOs in the US (by volume)?

Q3 in a nutshell

Q3 VC activity gets straight As, reflecting that the startup economy is alive and well during the pandemic.

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

Vc deal activity

VC Dealmaking Remains Extremely Resilient Throughout The Pandemic

Everyone Has Been Surprised By How Well The Global VC Market Has Performed So Far This Year

Global VC deal value reached $84bn in Q3, a 34% jump since Q2, and a 39% increase from the same period last year. This is no surprise as VC have come to terms with the new macro and micro-economic normals and get more comfortable with dealflow under the stay-at-home environment.

Another consistent trend we saw

Deal Count Across Regions And Across Stages Is Declining But...

As we predicted last quarter, VCs are not shying away from betting on the right company. However, there are only so many high-quality deals that are available, so VCs are piling up money on fewer top-quality deals, aka “flight from risk, which is a hallmark of the uncertain times that we live in today. That’s why aggregate deal values are healthy even though deal counts are dropping.

Let’s Look At The Numbers….

USA vc landscape in Q2 '20

In The USA, The VC Dollars Invested Held Steady

Europe vc landscape in Q2 '20

The European Picture Reflected What We Saw On The States Side

Latam vc landscape in Q2 '20

In Latin America, The VC Dollar Invested Jumped 147% Since Last Quarter

The massive jump in dollars invested is attributed to a rise in mega-deals

As it constitutes five mega-rounds that captured 73% of the VC dollars invested in LatAm in Q3, including...

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Diving Deeper Into The Stages Tells Us A Very Different Story…

Seed funding

At $1.9 Billion, Seed Funding In Q3 Was Down Only 8% Since Last Quarter

Early-stage funding

Early-Stage Funding (Surprisingly) Also Racked Up $14 BN Deal Value In Q3

VC Perspective

After six months of dealing with a pandemic-induced slump in deal flow, early-stage investors are becoming more comfortable investing in this “new normal.”

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

  • While a combination of logistical hurdles in deal sourcing and networking, a slowdown in deals closing during the summer months, and fears over a second wave of COVID-19 have contributed to a general level of cautiousness among many early-stage investors, the industry has adjusted to shelter-in-place and work-from home policies.

  • Not to mention…. the entrance of larger multistage and nontraditional investment at the seed stage in recent years has created a competitive environment, putting upward pressure on deal sizes and valuations

Early-stage funding for Q4

We Expect Early-Stage VC Deal Activity To Drop

Early-stage funding is riding de wave...

Late-Stage Resilience, A Consistent Storyline During The Pandemic

Why this matters

At the late stage, massive capital investment totals have been relatively normal within VC for the last couple of years.

More and more companies have chosen to stay private longer rather than seek an exit → Late-stage sector has grown significantly over the last 10 years. This translates into a bigger supply of startups choosing to raise capital in 2020.

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

Just as in public markets, private markets (including within VC) are experiencing flight from risk, given the market uncertainty. This means three things...

  • Late-stage companies are more attractive to investors now because they represent a lower risk relative to their early-stage companies.

  • Investors who are already exposed to VC are looking to consolidate ownership in their perceived winners, fueling late-stage VC activity as companies raise more capital in private markets.

  • Nontraditional investors, including Soverign Wealth Funds, mutual funds, and hedge funds, which have a reputation of being conservative, have not shied away from VC despite the economic slowdown.

What this all means

Increased Investor Interest In Late-Stage Means Three Things:

  1. Ramped up deal activity,
  2. Increased valuations
  3. Ever larger deal sizes

And we are seeing it in numbers...

  • In Q3, more than 30.5% of late-stage VC deals were over $25 million and drove 75.5% of the total value at the stage.

  • Late-stage valuations also continued to soar, with the median pre-money valuations now at $90 million. The valuation uptick is due to a shift in the population of startups choosing to raise capital in 2020.

  • Q3 saw 189 late-stage deals of $100 million or more, making 2020 the year that saw the most mega-deals in one year.

And who can forget the IPO market...

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

Late-stage funding has grown in recent months as investors look toward a strong exit market as the IPO markets opened up in June. Let’s take a closer look there...

Diving Deeper Into The Stages Tells Us A Very Different Story…

Quarterly vc-backed exits by type

At $2.7 Billion, Seed Funding In Q1 Was Up 8% Since Last Quarter

Ipo Frenzy...

Hot, Highly-Valued Software Companies Went Public This Quarter

VC perspective...

The quarter’s IPO activity implies a greater prospect of pricing at an attractive level relative to the last private valuation.

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

  • This is highlighted in the fact that six out of seven VC-backed companies in 2020 with an IPO market valuation above $10 billion went public this quarter.

  • These figures also highlight the unpredictability around the timing of these game-changing deals.  Having said that, exit sizes tick up across the board despite pandemic.

SPAC Madness

SPACS Are All The Rage These Days

Unless you have been living in a cave, you must have known that SPACS are coming in hot. However, with the COVID-19 and Election 2020 double whammy, we’ll forgive you if SPACs flew under the radar for you.


Basically, SPAC (or special purpose acquisition company) is a blank-check firm whose only asset is cash. The point is to have the SPAC merge with a private company, bringing the private company public in the process. If you’re looking to nerd-out on SPACs, here is an excellent place to start, straight from Harvard.

Spacs are having a moment this year

138 SPAC IPOs Have Raised More Than $53 Billion This Year

Spacs continue to hold the attention

Specially of many private market participants

Despite the return of traditional IPOs, with steady issuance of new SPACs and some newly announced SPAC acquisitions. If you’re wondering how SPAC differs from all the other exit options out there, here’s a quick and dirty chart.

VC perspective...

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

While we still believe that the majority of VC-backed businesses will choose to go public through an IPO or direct listing over SPAC, these blank-check vehicles may attract some of the slower-growing or stagnant unicorns that need a new strategic direction and access to public market funding to move forward.

What To Expect For Q4 Exit Market

Positive momentum in Ipos will carry on

Particularly The Performance Of New Listings, Has Encouraged Companies To Move Forward With IPOs

We expect Q4 to be no different

As Airbnb Prepares A Massive December IPO

We are in for a busy Q4 2020

A Handful Of Unicorns Are Already Slated For Multibillion-Dollar Deals

Either IPOs, direct listings, or SPAC combinations over the next couple quarters as VC-backed companies look to capitalize while the IPO window remains open.

Closing Thoughts...

In Q3 we saw a shift in Capital instead of correction Investors are risk-adjusting their portfolios, allocating capital into later-stages vs. earlier-stages and into hot industries vs. [negatively] affected industries.

Here's a summary of what it all means for you as a founder or investor:

Join us remotely February 22nd - 26th to learn how your  startup can build a repeatable playbook to acquire, retain & grow customers.

  • The M&A activity is also intense across all sizes of companies as founders are eager to sell given the uncertainty and valuations, which are quite fair. All of this means less competition for startups.

  • Are you a scrappy founder? Investors are looking to acquire more ownership with less capital in capital efficient companies that can grab more market share as competition fades.

  • Is your solution needed in a post-COVID world? If it is, are you building the best product in the most efficient way you can? Founders in hot industries like healthtech, B2B software, edtech, logistics – this is your moment, raise now!

  • The speed of which SPACs have grown this year is a warning sign for investors. Ultimately, time and the market will determine if they are a craze or are here to stayI