Get started with SVB

Are you an innovation company or investor seeking banking services to help you move bold ideas forward, fast?

Let's get started

Existing SVB clients

Get quick answers from our support page.

For help with commercial cards
1.866.553.3481
cardservices@svb.com

For other questions contact Client Service:

1.800.774.7390
clientservice@svb.com

Find a location

Technical or site issue?

State of the Markets
Q1 2020

THE PAST DECADE AND THE CURRENT STATE OF VENTURE

As we embark upon a new decade, it’s worth looking back over the past ten years to see how far we've come. Coming out of the Global Financial Crisis, fundraising and investment have exceeded prior peaks, and venture has globalized rapidly.

We’re now seeing important shifts in the ecosystem, which have rippled from rising benchmarks and a renewed focus on profitability. Without question, some right-sizing is needed. Fortunately, there is no shortage of strong companies to face these challenges.

A receptive public market has kept the IPO window open, and our outlook on exits remains positive barring a broader economic downturn. Given all of the above, we have reason to be optimistic.


Ending on a High

Many new highs were reached in 2019, as businesses and investors continued to raise and invest capital at a record rate. Flush with cash from high-profile exits and a favorable liquidity backdrop, significant dry powder is ready to be put to work.

Entering the eleventh year in the longest bull market in history and with an election on the horizon, the hundred-billion-dollar question is how close are we to the peak?

Ending on a high
 

Decade in Review


Plenty Left in the Coffers

Starting in 2014, the level of funding and number of funds jumped to new heights — after which the number of funds plateaued, while dollars raised continued to climb. Funds over $1B (“mega funds”) make up only 3% of funds raised, but represented a staggering ~30% of total capital.

Alongside growth in fund sizes, funds are being raised around more specific strategies. For instance, Andreessen Horowitz raised a $300M fund specifically to invest in cryptocurrency and blockchain companies. This follows a multi-year trend towards specialization.

us vc fundraising and dry powder charts
 

A Decade of Venture

Venture capital investment reached new highs in the 2010s, starting the decade under $50B and ending it at over $250B. As other ecosystems around the world have emerged and grown, the U.S. share of global VC investment has fallen below 50%.

While all regions have experienced massive growth in VC investment, Asian growth has been the most stellar, at around 18x. Growth of emergent ecosystems is partially attributable to the increasing tendency of investors in established regions to look overseas for investment opportunities.

venture capital investment and deal count chart
 

The PIPO Decade

A distinguishing feature of the 2010s was the emergence of the Private IPO (“PIPO”), which is Silicon Valley parlance for a company raising over $100M. PIPO investment increased elevenfold this decade. This injection of capital has allowed companies to stay private longer.

Over the last five years, the ownership percentage received in those deals has gone down, as the competitive environment has driven up valuations and more companies raised a repeat PIPO.

popos capital invested and count chart
 

Macro - Tech Dominates 2019


Stellar Year in the Public Markets

Fears of a full-blown trade war, slowing macro-economic conditions, and uncertain monetary policy created an unpredictable environment heading into 2019. Despite this, Tech saw the best full-year performance this decade — returning 48% and 19%, relative to the broader U.S. market. Tech benefitted from warming investor sentiment as the Fed cut rates, the trade war inched towards resolution and healthy fundamentals persisted within the public Tech sector.

US tech outperformance year-to-date chart
 

Fed Pushes Pause Button on Rates

Convertible debt issuance rose to $53B in 2019 — with Tech driving the lion’s share of issuance. The sudden fall in benchmark rates in Q3 pushed issuers to actively tap the markets — with ~40% of 2019 issuance coming in August and September.

Activity so far in 2020 has been robust as companies look to fix their balance sheets or seek M&A opportunities. However, the Federal Reserve has indicated it plans to keep rates steady through 2020 — which could be an additional headwind as we near an impending election.

tech convertible debt insurance chart
 

Tech Layoffs Tick Up in the Bay Area

After back-to-back years of declining Tech layoffs in the Bay Area, 2019 saw a rapid rise, which occurred primarily in San Francisco.

This dramatic increase was driven by companies like LendingClub, JUUL, Uber and WeWork, laying off more than 1,200 employees collectively. The latter three accounted for ~20% of all 2019 Bay Area Tech layoffs. While this could be a signal companies are looking to right-size their cost structure, 83% of U.S. startups recently surveyed by SVB plan to hire in 2020.

bay area tech layoffs by county
FOR THE COMPLETE REPORT

Reach out to your SVB Relationship Manager.

This material including, without limitation, to the statistical information herein, is provided for informational purposes only. The material is based in part on information from third-party sources that we believe to be reliable but which have not been independently verified by us, and for this reason, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice, nor is it to be relied on in making an investment or other decision. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction.

All non-SVB named companies listed throughout this document, as represented with the various thoughts, analysis and insights shared in this document, are independent third parties and are not affiliated with SVB Financial Group.

Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorized and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorized by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request.

Silicon Valley Bank, a public corporation with limited liability (Aktiengesellschaft) under the laws of the US federal state of California, with registered office in Santa Clara, California, USA is registered with the California Secretary of State under No. C1175907, Chief Executive Officer (Vorstand): Gregory W. Becker, Chairman of the Board of Directors (Aufsichtsratsvorsitzender): Roger F. Dunbar.

Silicon Valley Bank Germany Branch is a branch of Silicon Valley Bank. Silicon Valley Bank Germany Branch with registered office in Frankfurt am Main is registered with the local court of Frankfurt am Main under No. HRB 112038, Branch Directors (Geschäftsleiter): Oscar C. Jazdowski, John K. Peck. Competent Supervisory Authority: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Graurheindorfer Straße 108, 53117 Bonn, Germany.

Silicon Valley Bank, is an authorized foreign bank branch under the Bank Act (Canada).

Now Let's Get Started
 

See how SVB makes next happen now for entrepreneurs like you.

Connect with Us