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Quarter-End Insights

Venture Capital Outlook: Dry Powder for Late-Stage Deals

We expect to see a further bifurcation of VC activity between the late stage and the softening angel and seed space.

  • Heading into 2018, we expect to see a further bifurcation of VC activity between the late stage and the angel and seed space. VC deal activity in the earliest stages is beginning to soften, which could alleviate the recent upward pressure on valuations. On the contrary, however, we believe the large pool of capital available for late-stage deals may very well translate to strong competition and higher valuations.
  • Lengthening hold periods have encouraged investors to seek out more creative ways of finding liquidity outside the most prevalent strategic acquisition route--such as IPOs and PE buyouts. In addition, we'll continue to keep a close eye on the use of special purpose acquisition companies (SPACs) and direct listings to access the public markets.
  • We expect to see further growth in the direct secondary market from both institutional investors and employees as a result of extended hold periods. The rise of various exchanges and brokerages has led to a proliferation of easy access points to this market, which we see as a driver for the aforementioned parties to utilize such liquidity options.

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