First-Time Financings Decline Amid Covid-19

Seed-stage companies are struggling to close new financings amid the coronavirus outbreak, according to data firm PitchBook’s new report on venture capital activity. From March to June, there were just 316 first-time financings, down from last year’s quarterly average of 650.

Late-stage VC remained strong, however. There were more completed late-stage deals than early-stage deals in Q2, according to the data, which is highly unusual. Roughly $47 billion has been invested in late-stage startups so far this year, pushing unicorn valuations to record highs.

Exit count remains disappointing. There were 147 exits worth a total of $21.2 billion in Q2, putting this year on pace to deliver the smallest number of exits since 2011. Venture capitalists could face a major liquidity crisis in the coming years as billions of dollars stays locked up in aging unicorns.

Still, leading funds continue to raise impressive sums. Nearly 150 new funds raised a total of $42 billion in Q2.