Fred Wilson shared some research that shed some light on some changes in the private markets. The gist:
2018 saw the venture capital business moving to larger and larger deals. There were roughly 200 deals around the globe in 2018 where $100mm or more was raised.
And yet the number of total transactions declined slightly from 2017.
This trend is much more obvious if you look at the six years from 2013 to 2018. Total deal activity has increased less than 10% while total capital investment has almost tripled.
These trends are unsustainable. It is certainly attractive to de-risk by moving upstream to invest in more mature companies, larger rounds, etc. But if we don’t reseed our fields there won’t be as many of those mature companies in the future.
At the moment, it is not fashionable to do what we do at Social Leverage, but like Fred says, I am certain that it will continue to be profitable.
Originally published at Howard Lindzon.