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2018 Was a Record Year for VC Activity

March 7th, 2019

VC investment 2018

When talking about venture capitalists, California and its Silicon Valley may be the first place to come to mind. In 2018 the state accounted for well over half the $130.9 billion invested. Massachusetts and New York were second and third.

Last year was a record-breaker for VC investment. The Pitchbook declared, "2018 ended up being a banner year for the VC industry with $130.9 billion invested across 8,948 US venture deals, the first time annual capital investment eclipsed the $100 billion watermark set at the height of the dot-com boom in 2000."

One of the biggest beneficiaries of the year was the life sciences sector. VCs poured $23.3 billion into 1,308 deals, a 10 year high. Commenting on the development in the Pitchbook report Greg Becker, CEO of SVB Financial Group and of Silicon Valley Bank, said, "Investors are attracted by cutting edge advancements in tech leading to more effective drugs and personalized treatments."

Explaining the difference between tech investments and life sciences, Becker said, "[Life sciences] seek IPO proceeds to capitalize additional years of research and development, targeting a new drug approval. These funds are also designed to put biotechs in a better position to land secondary financing down the road or be acquired based on clinical data. A quick time to M&A exits and high markups via IPOs in biotech in particular are expected to continue, driving accelerated fundraising in healthcare."

Geographically, the West Coast had more deals (39.5%) than any other region. It also had more larger deals, which is why the region captured 61.7% of the total dollars. Together, California ($77.3 billion), Massachusetts ($11.9 billion) and New York ($14.3 billion) accounted for 79% of the VC investment.

Though they pall in comparison to the big three, Vermont, North Carolina, Ohio, Maryland, and Indiana all saw more VC activity than ever. Each state had more than 20 deals, with dollar totals more than doubled the year before. A blog post by the National Venture Capital Association says, "The solid year of venture investing in these five states (and others) are positive signs for the growing opportunity for startup activity across the country."

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