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1、H1 20253Introduction and Key Findings5Perspectives on The Innovation Economy7Macro12VC Fundraising 17VC Investment25VC-Backed Tech Benchmarks30ExitsSTATE OF THE MARKETS H1 20252Nearly every investor we speak to sees AI as a platform shift analogous to the steam engine,the internet or the rise of mob

2、ile.Pick your parallel.Even conceding the potentially inflated expectations and valuations this sentiment will drive investment.”STATE OF THE MARKETS H1 20253Marc CadieuxPresident SVB Commercial B Mark GallagherHead of Investor CoverageSVB Commercial B Venture investment is booming,companies are rai

3、sing colossal rounds and valuations are flexing to all-time highs.That is,if youre an AI company.For the rest of the innovation economy,the times are slower.Deal activity is stagnant,valuations are low and exits are limited.AI is the explosive,albeit unproven,fuel of the innovation economy.The posit

4、ive is that new technologies spur recoveries.In 2009,mobile a vertical turned horizontal spurred the global financial crisis(GFC)recovery that took under three years to return to peak levels and fueled durable growth.Nearly every investor we speak to sees AI as a platform shift analogous to the stea

5、m engine,the internet or the rise of mobile.Pick your parallel.Even conceding the potentially inflated expectations and valuations this sentiment will drive investment.At the company level,the innovation economy is recovering in a healthy way.Efficiency reigns supreme.Companies that successfully rai

6、sed capital in 2024 managed their burn,and companies across life stages are closer to profitability.With the focus on efficiency,revenue growth has been slow to improve.Growth rates reached a floor in 2024 and are no longer falling,but they arent improving either.Lower interest rates may be the acce

7、lerant that kick-starts growth.Both the market and Federal Open Market Committee(FOMC)members expect the federal funds rate(FFR)to fall below 4%by year-end,which could help spur additional spending on new technologies from public companies and lead to higher growth rates.But the strong December jobs

8、 report and continued wage growth at 4%may put the breaks on future cuts,and if inflationary policies such as tariffs are implemented,the rate-cutting cycle could end.If a low interest rate outcome prevails,it may provide the last push to crack the exit window,and provide the much-needed liquidity t

9、o end the three-year exit drought.A handful of notable companies like Chime,xAI,Stripe and others are well positioned to go public in 2025.Furthermore,a less aggressive anti-trust policy at the Federal Trade Commission(FTC)may send big tech on a shopping spree especially for AI companies with talent

10、 and tech that can scale in-house offerings.Most facets of the innovation economy found market bottom in 2024 and are transitioning to growth in the year ahead.While hype cycles come and go,advances in one sector spur innovation in ways we cannot yet anticipate.What we know for sure is that investme

11、nt and innovations today scaffold the foundation of future growth.STATE OF THE MARKETS H1 20254AI drives the next wave of growth in venture investment.Jump to PageDemand for venture outpaces the supply,throwing prices on ice.Jump to PageCompanies raising VC have controlled their burn,leading to low

12、growth.Jump to PageLarge funds dominate fundraising,changing long-term venture dynamics.Jump to PageSTATE OF THE MARKETS H1 20254VC fund life cycles extend,changing GP and LP1 expectations.Jump to PageMost unicorns are stuck in the stable without metrics to go to the IPO race track.Jump to PageA gro

13、wing number of VC-backed companies are running out of runway.Jump to PageM&A remains scarce and increasingly reserved for the most troubled companies.Jump to PageNotes:1)General Partner(GP).Limited Partner(LP).5“Many VCs went all-in for crypto in 2020.Unfortunately,by 2022 plans for decentralized fi

14、nancial systems were shaken when the crypto industry collapsed,crushing many startups and the funds that backed them.AI use cases are clearer and less speculative,but likely will play out very differently than VCs expect today.The crypto boom and bust is training data that every investor should incl

15、ude in their AI projection models.”Eric Paley General PartnerSource:SVB Interviews.STATE OF THE MARKETS H1 2025 RETURN TO TABLE OF CONTENTS“Conversations have picked up with companies looking to go public.Overall Fed policy is positive.People like the clarity of the new administration.But you have a

16、 high bar in the tech market.To IPO,companies need high ARR(more than$300M-$400M)and a good Rule of 40.But more than that,you need to be able to predict the next 12 months of revenue.”“As hiring remains competitive,weve seen public companies leverage liquidity to attract and retain top talent.Privat

17、e companies increasingly want to tap into the same benefits.As a result,private companies are approaching Forge to better understand how they can adopt liquidity programs on a similar scale.”Jordan SaxeSr.ManagingDirector,Listings:AmericasEric ThomassianHead of Private Company RelationsSTATE OF THE

18、MARKETS H1 20256Marc CadieuxPresidentSVB Commercial BankSilicon Valley BMark Gallagher Head of Investor CoverageSVB Commercial BankSilicon Valley BMarc Cadieux is president of Silicon Valley Banks commercial banking business where he focuses on the needs of innovation companies at all stages of deve

19、lopment,including the investors who back them.Mark Gallagher is the co-head of the investor coverage practice.He and his team provide tailored services,industry insights and strategic guidance to top investors in the innovation economy.Eli OftedalSenior Analytics ResearcherSVB Market InsightsSilicon

20、 Valley BJosh PherigoSenior Analytics ResearcherSVB Market InsightsSilicon Valley BAndrew Pardo,CFASenior Analytics ResearcherSVB Market InsightsSilicon Valley BThe SVB Market Insights team leverages SVBs proprietary data,deep bench of subject-matter experts and relationships with world-class invest

21、ors and founders to develop a holistic view of the innovation economy for our State of the Markets Report.We partnered with lead authors Marc Cadieux and Mark Gallagher,who bring over a half century of industry knowledge and experience working with many of the top companies and investors across the

22、innovation economy.Together,were proud to present this 29th edition of SVBs State of the Markets Report.To learn more about the lead authors see page 37.Jake Ledbetter,CFASenior Analytics ResearcherSVB Market InsightsSilicon Valley B 7STATE OF THE MARKETS H1 2025 RETURN TO TABLE OF CONTENTSSTATE OF

23、THE MARKETS H1 20258US VC Fundraising1Notes:1)For funds headquartered in the US by date closed.2)For funds that have a reported focus.Only half of funds have a reported focus.3)Limited partner(LP).4)Tech defined broadly as VC excluding healthcare.5)Late-stage defined by PitchBook Data,Inc.as Series

24、C+or a round that occurs more than five years after a company is founded.6)Nasdaq and New York Stock Exchange(NYSE).Source:Preqin,PitchBook Data,Inc.,S&P Capital IQ and SVB analysis.2025 OutlookUS venture funds outperformed our 2024 outlook to the tune of$16B fueled by large funds and AI.The top 10%

25、of funds accounted for 64%of venture fundraising in 2024,and half of funds closed reported a focus in AI.2 With the same trends likely to persist in 2025 fueled by a continued lower rate environment and potential distributions to LPs3 we anticipate a growth in fundraising this year.US Series A Tech

26、Deals42025 OutlookSeries A tech deals underperformed our expectation,hitting the lowest level since 2012.But the backlog of seed companies looking to raise a Series A remains,thus we expect moderate growth in Series A tech deal activity to reach 1,450 deals.While this would represent an inflection p

27、oint toward growth,activity levels are still lower than they were a decade ago.US Late-Stage Tech Valuations4,52025 OutlookLate-stage valuations rebounded quickly,and we expect continued expansion.But the absolute increase obfuscates the reality.AI deals are the primary driver of this jump.For examp

28、le,AI has a 100%valuation premium to non-AI at Series C.Secondly,late-stage deals are often structured through instruments like liquidation preferences and ratchets.That said,strong valuations reflect improving sentiment.US VC-Backed Tech IPOs on Major US Exchanges62025 OutlookWe jumped the gun on o

29、ur 2024 IPO outlook;anticipated exits did not materialize.We expect the IPO window may tentatively open for a select group of top companies that are profitable or have a clear path to profitability.Several tech companies such as Chime,xAI and Stripe are all positioned to go public after ServiceTitan

30、s strong performance in Q4.$66B$50B$80B2025 OutlookActual2024 Outlook1,500 1,450 1,370 Actual2024 Outlook2025 Outlook$83M$80M$95MActual2024 Outlook2025 Outlook15710Actual2024 Outlook2025 Outlook$0B$10B$20B$30B$40B$50B$60B$70B$80B$90B$100BQ1 16Q3 16Q1 17Q3 17Q1 18Q3 18Q1 19Q3 19Q1 20Q3 20Q1 21Q3 21Q1

31、 22Q3 22Q1 23Q3 23Q1 24Q3 245.50%4.50%lllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllllll2025 Year End2026 Year End2027Year EndLonger run0%2%4%6%8%10%Jan.20Jul.20Jan.21Jul.21Jan.22Jul.22Jan.23Jul.23Jan.24Jul.24The Federal Reserve has made great progress in its fight against inflation,b

32、ut VC continues to reel from the consequences of high interest rates.Inflation settled around 2.5%-3.0%at the end of 2024,and consumer survey respondents reckon 2025 will show similar readings.The downward trend in expectations will be especially reassuring to Fed officials who have stressed the imp

33、ortance of anchoring inflation expectations.With this progress has come a normalizing of rates,with 100 basis points of rate cuts in the back half of 2024.In his December speech,however,Chair Jerome Powell downplayed potential future rate cuts.Indeed,the dot plot suggests rates just under 4%for the

34、remainder of 2025 and slightly below that for 2026.Markets tend to agree,at least through year end.Of course,expectations are just that:predictions about an uncertain future.Shocks like economic downturns or tariff policies could lead to a reversal in interest rate policy.Lower interest rates are a

35、potential tailwind for VC.Over the past several years,VC investment has been highly correlated to interest rates.As rates decrease,VC activity may be expected to get a boost.But this is not a return to the market peak seen during the zero interest rate policy(ZIRP)period.In a moderate interest rate

36、environment,rates will likely play a smaller role in determining VC levels,similar to the 2017-2019 period.Notes:1)Dot plot based on the December 17-18 FOMC meeting.Market-implied rates as of January 9,2025;each observation represents one FOMC meeting through 2026.2)Upper end of target range.3)Count

37、 of articles in major news sources by year,indexed to 100 at 2019 levels.Source:University of Michigan Surveys of Consumers,Bureau of Labor Statistics,FOMC,Bloomberg,PitchBook Data,Inc.,Federal Reserve Economic Data,St.Louis Fed,Factiva and SVB analysis.STATE OF THE MARKETS H1 20259Median75th Percen

38、tile25th PercentileActual RateExpectation,MedianExpectation,RangeFOMC ExpectationsMarket ExpectationQuarterly Deal Value AnnualizedFed Funds Rate2Current Level4.54.03.53.02.52.0llllllllllMost FOMC members believe the FFR will be between 3.75%and 4.00%at the end of 2025.010020030040050060019202122232

39、4Inflation and VCInterest Rates and VCIn 2024,there were still 3x the number of articles on inflation and VC as in 2019.lThe Fed is in a balancing act.While inflation has stabilized,it is at a level above the Feds target.The cost:A weakening labor market.“If you have a job,youre doing very well,”not

40、ed Jerome Powell in his December 18 press conference.“If you are looking for a job,though,the hiring rate is low.”The headline unemployment number has remained stable around the 4%baseline,but other metrics show signs of softening,such as the 23-percentage-point drop in the share of workers saying t

41、hat jobs are plentiful.The tech job market was perhaps the tip of the spear in terms of white collar job weakening,as venture dollars dried up.Since then,job growth in professional services,IT and finance have underperformed other industries.Similarly,there is a bifurcation in consumer spending.From

42、 2018 through 2021,consumer spending increased similarly for both upper-and lower-income consumers.Starting mid-2021,however,there has been a bifurcation.Those whove kept their high-earning jobs continue to spend more.Lower-income earners,meanwhile,are increasing their spending far less,with the bul

43、k of the spending increase going to combat inflation.Flat spending delivered another blow to a challenged consumer sector.Revenue growth rates among VC-backed consumer companies fell 40-percentage points since 2021 on top of a 60%decline in VC investment.1Notes:1)Decline in revenue growth rates at t

44、he median for US VC-backed companies.2)Current employment statistics industry code 50(“Information”)includes tech.Source:Bloomberg,Bureau of Labor Statistics,Federal Reserve and SVB analysis.STATE OF THE MARKETS H1 2025101.5%2.0%2.5%3.0%3.5%Q1 18Q3 18Q1 19Q3 19Q1 20Q3 20Q1 21Q3 21Q1 22Q3 22Q1 23Q3 2

45、3Q1 24Q3 24Credit CardsConsumer LoansUnemployment RatePercentage Reporting Jobs Are PlentifulAll IndustriesFinanceProfessional and Business ServicesInformation/Tech2-4%-2%0%2%4%6%8%10%Jan.22Apr.22Jul.22Oct.22Jan.23Apr.23Jul.23Oct.23Jan.24Apr.24Jul.24Oct.24In 2022,information/tech sector jobs grew mo

46、re than other industriesin 2024,they grew less.2018201920202021202220232024-15%-10%-5%0%5%10%15%High IncomeLow IncomeMid Income0%10%20%30%40%50%60%0%3%6%9%12%15%18%Jan.18Jun.18Nov.18Apr.19Sep.19Feb.20Jul.20Dec.20May.21Oct.21Mar.22Aug.22Jan.23Jun.23Nov.23Apr.24Sep.24Job Plentiful PercentageUnemployme

47、nt RateUS tech layoffs have slowed as most of the companies that could shed jobs to save money have already done so.For those in the job market,there are fewer positions to choose from.Tech hiring has stagnated for the last two years.Tech companies are hiring at half the pace they were in the 2022 p

48、eak,the weakest level since at least 2016,according to LinkedIn data.US tech salaries are showing signs of weakening due to lower demand and pressure from lower-cost and growing talent pools overseas.Emerging markets in Asia,Africa and Latin America are adding millions of coders every year,quickly c

49、losing the software skills gap to the US.Startups are taking note.About 60%of companies already outsource app development.India is expected to overtake the US in number of developers by 2030.AI is having a greater impact on programming work in the US,though it doesnt appear to be replacing human dev

50、elopers(yet).According to an annual survey from Stack Overflow,63%of developers now use AI in their work,up from 44%last year.Most use it to directly write code,find answers or debug.Complex coding tasks are still best left to the humans,a sentiment reflected in lukewarm responses gauging developers

51、 trust in the accuracy of results.This may explain why only 12%of developers said they view AI as a threat to their job.Notes:1)Hiring rate is the percentage of LinkedIn members in the technology,information and media industry who added a new employer to their profile in the same month the new job b

52、egan.The hiring rate is indexed to the average rate in 2016.Layoffs in thousands.2)Annual survey most recently conducted in May 2024 with 65,000 respondents.3)Among countries with at least 1M developers.4)Based on global HackerRank scores,last updated in 2016.Source:LinkedIn Workforce Report,Stack O

53、verflow Developer Survey,GitHub Octoverse Report and SVB analysis.STATE OF THE MARKETS H1 2025110K30K60K90K120K150K180K4050607080901002021202220232024US tech hiring has slowed to half its peak pace in 2022.26%27%28%29%30%32%32%32%33%36%39%41%63%MexicoTurkeyArgentinaBrazilJapanIndonesiaPhilippinesVie

54、tnamIndiaNigeriaSingaporePakistanBangladesh42%77%44%43%72%63%2024Currently Using AI in Development:Favorable Opinion of AI Tools for Development:Top Uses for AI:1.Writing Code 82%2.Finding Answers 68%3.Debugging/Testing 57%4.Documenting Code 40%5.Generating Content 35%Trusts the Accuracy of AI Outpu

55、ts:Developers15M22MYoY Growth33%21%Median Salary$21K$130KTalent Rank431st28thLinkedIn Tech Hiring IndexNumber of Tech Job Layoffs AnnouncedAsiaAfricaLatin AmericaEurope$100K$120K$140K$160K$180K$200K$220KDeveloper:QAData AnalystDeveloper:DesktopDeveloper:Front-EndDeveloper:GraphicsDeveloper:Emb.AppsD

56、eveloper:Full StackDevOps SpecialistEngineer:DataData ScientistDeveloper:Back-EndEngineer:Cloud Infr.Engineer:Site ReliabilityEngineer:ManagerSalaries for full-stack developers are down 7.1%since 22.23 Median24 Median(Decrease)24 Median(Increase)202312STATE OF THE MARKETS H1 2025 RETURN TO TABLE OF

57、CONTENTSNotes:1)Assessed over the trailing 24 months to smooth data given significant swings caused by large top-end outliers.Source:Preqin,PitchBook Data,Inc.and SVB analysis.Rank20202021 202320241Tiger GlobalGeneral Catalyst2Andreessen HorowitzNew Enterprise Associates3LightspeedAndreessen Horowit

58、z4AccelKhosla Ventures5New Enterprise AssociatesARCH Venture Partners 6Flagship PioneeringNorwest Venture Partners7ARCH Venture Partners Flagship Pioneering8Khosla VenturesTiger Global9Norwest Venture PartnersGreenoaks Capital10General CatalystOrbiMedIf Bernie Sanders were a venture economist,he wou

59、ld undoubtedly draw attention to the growing inequality in venture fundraising.The bottom 90%of venture firms have raised as much capital as the top 2%,highlighting a significant skew towards the largest funds.Since 2020,the VC industry has been increasingly dominated by large firms,with the top 10

60、firms alone capturing 22%of all fundraising.This concentration of capital is leading to entrenchment,with the elite group of top 10 VC fundraisers changing little from year to year.This dominance of large funds is marginalizing mid-sized funds.There is a clear bifurcation in the market,where the big

61、gest funds focus on making large investments and,in some cases,nearly“index”the venture market.On the other hand,small funds carve out niches,targeting specific sectors or stages.This leaves mid-sized funds in a precarious position.Their role is less clear.Most are neither giants able to compete in

62、mega-deals nor niche funds in hyper-specialized markets.This could lead to consolidation and a less competitive market,with capital and talent increasingly concentrated among a few top firms.STATE OF THE MARKETS H1 202513$0B$20B$40B$60B$80B$100B$120B$140B$160B$180B$200B$220B$240B$260B$280B0%5%10%15%

63、20%25%30%35%40%45%50%55%60%65%70%2000200120022003200420052006200720082009201020112012201320142015201620172018201920202021202220232024US Venture Capital Fundraising:Trailing Twelve Months Share of Venture Capital Fundraising Going to$500M Fund1$500M funds consistently capture 35-45%of venture fundrai

64、sing The top 10 firms capture 22%of all fundraisingTop 10%of Firms:$258BBottom 90%of Firms:$148BColors illustrate change in rankingDeal Size,Top 20 VCsDeal Size,All VCsSeries ASeries BSeries C$0M$10M$20M$30M201920202021202220232024$0M$20M$40M$60M201920202021202220232024$0M$30M$60M$90M201920202021202

65、220232024$0M$25M$50M$75M$100M201920202021202220232024$0M$75M$150M$225M$300M201920202021202220232024$0M$125M$250M$375M$500M201920202021202220232024Series ASeries BSeries CValuation,Top 20 VCsValuation,All VCsBased on the data,lessons from past downturns have not been fully absorbed.Namely,scaling is

66、hard!There is only so much capital that can be effectively deployed in each company without driving inefficient burn.For VCs investing in early stages,fund sizes are difficult to scale.Larger funds will naturally have big portfolios of small bets that begin to mirror the market,limiting outperforman

67、ce potential.This venture pitfall persists.The largest VCs are deploying more capital per deal and paying more per deal compared to the median VC fund.Overpaying can lead to underperformance,which is particularly evident in the top quartile of large funds.Concentration of capital and power can drive

68、 up prices unnecessarily,leading to outsized valuations during peak times valuations that the industry is still struggling to come to terms with today.This trend poses significant challenges for the industry.Larger funds simply have more capital to deploy,and those that invested early can dominate l

69、ater-stage deals.Together,this can effectively squeeze out smaller VCs.Nevertheless,the incentives for individual firms to grow remain compelling,making it difficult to reverse course without LP pressure.Should muted returns become the norm,however,fund sizes may decrease and LPs may increasingly op

70、t for other asset classes.STATE OF THE MARKETS H1 202514Notes:1)Top 20 VCs defined as US-based VCs that have raised the most during their life,calculated by the funds aggregate VC fund size.2)Internal rate of Return(IRR);For each vintage,large and small funds are those that have fund sizes above or

71、below the median,respectively.3)Big funds are those$750M+,small are less than$250M.Analysis assumes the top quartile return of each group for vintage years 2010-2019.Carry net of an 8%hurdle rate.Source:Preqin,PitchBook Data,Inc.and SVB analysis.Management Fees Carried Interest$50M$150M$336M$389M0%2

72、0%40%60%80%100%SmallBigFund SizeMiddle 50%of Small FundsMiddle 50%of Large FundsMedian Small FundsMedian Large Funds-10%0%10%20%30%20002005201020152020VintageAfter 2014 over half of returns are unrealized.The old rule of an 8-to 12-year fund life cycle is not a reality for most funds.Top quartile fu

73、nds dont actually return capital for 16-20 years.To reflect this new reality,some funds are changing the language in their limited partner agreements(LPAs)to reflect longer fund life cycles but cut off the fee period.With large funds investing at the latest stages,companies are able to stay private

74、longer,and the trend toward large funds is only likely to continue.As a result,the average age of a US VC-backed unicorn is now 10.3 years,just four months less than the average age of tech IPOs.The vast majority of those unicorns do not have the metrics to make a compelling IPO(see pg.32).Despite l

75、onger time frames,LPs are still investing in venture.During peak times,we saw record-low time between funds.While it is increasing,it is still historically low;however,this time will likely continue to grow as fewer funds have come back to market since 2022 and investment rates remain below peak lev

76、els.What this data misses is the VCs that may not raise capital again after investing their first fund at the peak of the market and having marginal returns to show for it.But a venture firm doesnt disappear overnight unless they sell their portfolio in a secondary.It takes 16-20 years to liquidate

77、their investments and close their doors.STATE OF THE MARKETS H1 2025150%50%100%150%200%250%300%350%400%450%500%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Median DistributionsMedian Residual Value of Investment(Unliquidated/Unreturned)1Fund Brea

78、kevenVintage Yr.Fund Age2019171615141312111098765432118100%An 8-12 yr.fund cycle is not realistic:Most of the fund is not distributed.Majority is distributed to LPs with limited residual value:True fund life cycle is 16-20 yrs.Notes:1)For top quartile multiple on invested capital(MOIC)funds.Distribu

79、tions are Distributions to paid in capital(DPI)and Residual Value is the residual value of paid in capital(RVPI)both expressed as a percent of capital paid in.Source:Preqin and SVB analysis.41322628272932293024232423151510791224495236424146474548363432292931232420293458666478706471616962504547444440

80、4034434120052006200720082009201020112012201320142015201620172018201920202021202220232024Middle 50%of FundsMedianFunds More Than Double the PaceDeployment rate slows and the time between funds increases amid venture contraction.Consistent,Predictable Fundraising CyclesStartup launch programs have bec

81、ome the front door for the venture ecosystem,welcoming in thousands of startups each year that might otherwise be overlooked or go unfounded.Deals from incubators and accelerators are typically small dollar values relative to seed deals,but they comprise a significant share of overall VC activity,ac

82、counting for a quarter of all deals in 2024.1 Incubators are a stabilizing force in early-stage formations.Not only do they act as a quality screen for investors,theyre also less fickle in downturns.When VCs apply the brakes during market lulls,incubators tend to continue churning out new cohorts at

83、 a steady rate.The era of startup programs took root during the Global Financial Crisis when programs such as Y Combinator,Plug and Play and Techstars helped launch iconic companies like Stripe,AirBnB and DoorDash.More than 13,000 companies from these programs across the country have raised over$200

84、B in VC over the last 15 years.As the model has spread nationwide,the impact from startup launch programs has been more pronounced in non-tech hubs,where supportive local governments,corporations and universities give these programs a concentrating effect,attracting as much as 40%of all VC deals in

85、some states.Here,incubators fill the market gap by finding and supporting founders outside of the main innovation hubs.Notes:1)Incubator and accelerator deals are presented here as a share of overall VC deals to show their scale,however,we exclude these deals in our analysis of VC activity elsewhere

86、 in the report.2)Includes companies that received an incubator or accelerator deal,as classified by PitchBook.Premium as compared to companies with no incubator/accelerator deal.Source:PitchBook Data,Inc.and SVB analysis.STATE OF THE MARKETS H1 20251643%12%0%5%10%15%20%25%30%200520062007200820092010

87、20112012201320142015201620172018201920202021202220232024Accelerators and Incubators accounted for 24%of US VC deals in 24.$0B$50B$100B$150B$200B2005200720092011201320152017201920212023In VC Raised by AlumsNotable Alum:Companies IncubatedSince 05Founded:2005Founded:200625%77%80%SeedEarly StageLate St

88、ageCompanies from incubators have a valuation premium at every stage.23%25%43%29%31%24%41%20%29%38%STATE OF THE MARKETS H1 202517 RETURN TO TABLE OF CONTENTSSimple supply and demand models go a long way in describing the current state of the innovation economy.We assessed demand by looking at the nu

89、mber of companies that need to raise in the next six months and how much those companies would need to finance operations at current burn rates.The supply of capital is simply a function of US VC fundraising and investment.As company fundraising boomed in 2020 and 2021,the demand for capital fell be

90、cause fewer companies needed to raise at any given time.At the same time,supply increased,pushing prices for companies higher as measured by revenue multiples.Fast-forward to 2022 and the trend flipped.Demand began to rise and supply began to fall,pushing multiples down.Not only are valuations lower

91、,but the speed of valuation growth is slower.It now takes the typical Series A company over two years to increase its valuation as much as companies in 2021 did in a single year.While this is partially attributable to the supply and demand in venture,it is important to note that growth rates for VC-

92、backed companies have also slowed substantially(see pg.26).This slower growth further drives down multiples as high growth is one of the main reasons for investing in a company with a high multiple.STATE OF THE MARKETS H1 202518Median Series C Revenue Multiple(Trailing 4 Quarters)Spread Between Supp

93、ly and Demand Indexes for US VC1 0%20%40%60%80%100%120%140%160%Series ASeries BSeries CSeries D201920202021202220232024Notes:1)Demand for venture is a function of the number of companies that need funding in the next six months and the amount those companies are burning.Supply is a function of fundr

94、aising and investment(equal weighted index of the two).A baseline for the index was established between 2017-2019;the percentage point variance is expressed in relation to that baseline.2)Calculated at the valuation increase between rounds divided by the years between rounds for the given year a com

95、pany closed a deal.Source:SVB proprietary data,PitchBook Data,Inc.and SVB analysis.Middle 50%of DealsMedianQ1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q42018201920202021202220232024-100pp-50pp0pp50pp100pp150pp200pp250pp5x10 x15x20 x25xDemand:Company Funding Needs Next 6 Months Supply:Ventu

96、re Fundraising and Investment Supply significantly outpaces demand.Demand outpaces supply.Multiples Contracts as Oversupply Ends0 x10 x20 x30 x40 x50 x60 x70 x80 x90 x100 xQ1Q3Q1Q3Q1Q3Q1Q3Q1Q3Q1Q3202320242023202420232024Series ASeries BSeries CAnd just like that,VC is back.US VC investment totaled$2

97、04B in 2024,a 30%year-over-year increase and the third-highest annual total on record.The recovery marks an about-face for the venture ecosystem.This year started at a low-point,after eight straight quarterly declines in annual VC investment,and ended on a hot streak with three quarterly increases.W

98、hat happens next depends on the prospects for the one technology most responsible for the turnaround:generative AI(GenAI).Exclude AI investment and the story changes.There is no meaningful investment uptick for companies not leveraging AI.Investment for this group is essentially flat for the last ye

99、ar.AI has gobbled up VC market share in the last two years.At the peak of the last cycle,only one in four companies getting VC deals had AI as a vertical.Now,its half of all companies.And a handful of these are controlling a huge portion of the VC dollars.For the first time,more mega-deal dollars we

100、nt to AI companies($73B)than to non-AI companies($47B).This inflection marks a turning point like we havent seen since the rise of mobile technology after the GFC.The emergence of the iPhone and the App Store kicked off a wave of innovation that at first was confined to a core group of mobile-focuse

101、d companies.VC flowed disproportionately to this group for the first few years,sparking a general VC recovery as mobile spread to all companies.Could we see a similar trend with AI?Notes:1)What-if projections simulate investment levels if AI company investment follows the same path as the mobile tec

102、h vertical post-GFC,indexed to the investment peak prior to the decline.Our forecast picks up when mobile VC returned to its pre-GFC peak,which is where we are with AI now.Source:PitchBook Data,Inc.and SVB analysis.STATE OF THE MARKETS H1 202519Non-AI VC InvestmentHorizontal PlatformsAI grows 50%-60

103、%in 2025 before leveling off.All other investment grows 20%in 2025.02550751001251501752002021202220232024202520262027$13B$17B$25B$61B$34B$39B$73B$65B$66B$79B$203B$111B$73B$47B201820192020202120222023202461%Of VC mega-deals went to AI companies.$0B$100B$200B$300B$400B200720082009201020112012201320142

104、015201620172018201920202021202220232024202520262027AI/ML:Vertical AppsAI Chips and Machines48%of VC went to AI-leveraged companies in 2024.What if AI investment follows the trajectory of mobile investment after the GFC?161100105Other VCGFC RecoveryCore AI VCNon-AI VCCore AI VCNon-AI VCCombinedIts ha

105、rd to comprehend the advancements in computing that have led us to GenAI.In 1969,the Apollo Guidance Computer calculated 14,000 math operations per second to deliver astronauts to the moon.Today,we measure compute in quadrillions of operations per second(called a PetaFLOP).ChatGPT 1 took a full day

106、of PetaFLOP computing to train its 100-million parameter model.But even PetaFLOP-days arent cutting it anymore.Metas latest model,Llama 3.1,required a staggering 1,200 PetaFLOP-years to train on over a trillion words.All of that compute doesnt come cheap.Every new large language model(LLM)costs hund

107、reds of millions of dollars to develop,and foundational AI companies are churning these out several times per year,releasing multiple versions that are optimized for developers to build upon.The metric that may best capture this activity is NVIDIAs revenue.The AI chipmaker has cornered the market on

108、 semiconductors needed to train new models,and its sales are rising in proportion to public adoption of AI.Corporations are increasingly investing in AI products and tooling.Research by the VC firm Menlo Ventures shows that US companies spent at least$16B on AI products in 2024,a 7x increase from 20

109、23.1 Thats only expected to grow as the costs come down and apps get better.STATE OF THE MARKETS H1 202520Notes:1)According to Menlo Ventures analysis of dollars spent on foundation models,model training and deployment,AI-specific data infrastructure and new GenAI applications from startups and esta

110、blished corporations.2)This is an illustrative example with model capability and inference costs approximated based on estimated data such as the number of parameters to train models and subjective factors like iterative improvements in models.Source:SEC filings,Google trends,company websites and SV

111、B analysis.0255075100$0B$5B$10B$15B$20B$25B$30B$35B$40B201720182019202020212022202320241101001,00010,000100,0001,000,0002018201920202021202220232024PetaFLOP-DaysGPT-1Llama 3.1BERTXLNetGPT-2GPT-3LLaMA 2OPTPaLMNemotron-4(NVIDIA)OtherGPT-4Inference CostModel CapabilityGPT-3(2020-22)GPT-4(2023-?)OpenAI-

112、o1(2024-?)GPT-4o MiniGPT-3 AdaGPT-3 DavinciGPT-4 TurboGPT-3 BabbageGPT-4oo1-PreviewModel CapabilityInference CostFull-Scale,LegacyLightweight,UtilitiesOptimized,General UseFull-Scale,PremiumPhase 1:Most-capable,highest-cost model is released.Phase 2:Less-powerful model with more efficient inference

113、costs.Phase 3:Further optimized for specific tasks or faster use.Phase 4:Full-scale models,obsolete by new architecture.Ex)GPT-3 series(now)Ex)GPT-4 TurboLife Cycle of LLM Model DevelopmentEx)GPT-4oEx)GPT-4o minio1-MiniWith AI driving nearly all of the growth in VC investment,its not surprising that

114、 the sectors benefiting most are those where the AI hype is peaking:enterprise software(LLMs)and frontier tech(autonomous machines).Attention on these sectors is at an all-time high and so is investment.Companies at the core of GenAI,such as xAI,Databricks and OpenAI,are generating massive VC deals,

115、pushing enterprise software investment up 47%from 2023.Much of the capital for these deals is consumed by the high cost of training models.A single new LLM released to market takes hundreds of millions of dollars in compute to train,and the pace of new releases is only growing.Then there are the mac

116、hines.Autonomous vehicles are driving a large share of the investment in frontier tech,which has jumped from the fourth-most heavily invested sector in 2022 to the second-most favored sector in 2024.Defense technology is also emerging as a growth area for frontier tech investors,with notable deals f

117、or several defense tech unicorns such as Anduril among the largest deals of the year.Consumer tech is still struggling to find its footing in the era of AI.Only 25%of consumer companies have AI as a key vertical,yet those that are building AI products have a much higher valuation over those that don

118、t(4x premium for later-stage companies and 2x for early-stage).STATE OF THE MARKETS H1 202521Notes:1)Based on SVBs proprietary taxonomy of PitchBook deals.2)xAI closed two$6B deals in 2024.3)Anthropic closed three deals for$9.2B raised in 2024.At least$3B of this was convertible debt.They closed ano

119、ther$1B in January 2025 and are in-progress to close$2B more,according to PitchBook.Source:PitchBook Data,Inc.and SVB analysis.20192020202120222023202412345Enterprise SoftwareFrontier TechFintechConsumer InternetClimate Tech47%50%-4%31%13%YoY Change in US VC-25%14%-12%40%-7%-23%49%110%-6%145%69%126%

120、191%206%314%ClimateTechEnterpriseSoftwareFintechFrontierTechConsumerInternetThe valuation premium for companies with an AI vertical is greatest at the later stage.SeedEarly StageLater Stage0%10%20%30%40%50%60%70%80%201620172018201920202021202220232024Enterprise SoftwareFrontier Tech FintechConsumer

121、InternetClimate TechCompanyVC in 24SectorFocusxAI2$12.1BEnterpriseFoundational AIDatabricks$10.0BEnterpriseAI InfrastructureAnthropic3$9.2BEnterpriseFoundational AIOpenAI$6.6BEnterpriseFoundational AIWaymo$5.6BFrontier TechAutonomous VehiclesAnduril$1.5BFrontier TechAerospace and DefenseCoreweave$1.

122、1BEnterpriseAI InfrastructureMistral AI$1.1BEnterpriseFoundational AIWayve$1.0BFrontier TechAutonomous VehiclesScale AI$1.0BFrontier TechAerospace and DefenseDefense tech is emerging from the shadows to claim a more prominent role in the venture ecosystem.The wars in Ukraine and Israel have drawn st

123、ark awareness to the impact that technologies such as drones have on the modern battlefield.VC investment in US defense technology has ticked higher as a result,jumping 2x in 2023 and staying at that level in 2024.The largest deals are dominating with the top 10 deals accounting for about 80%of VC d

124、ollars in the last two years,a 20-percentage-point jump from 2022.At least seven defense tech unicorns received later-stage deals in 2024,positioning the cohort well for potential exits in the year ahead.More VCs are mentioning defense tech as a specific focus area than ever before.General Catalyst

125、named defense a key strategy for their recent$8B fund(though it wasnt clear how much of that was earmarked for defense).Follow-on investors could further increase the demand for what is still a niche segment of the venture ecosystem.Defense tech companies have steeper capital requirements than other

126、 sectors.Later-stage deal sizes were 4x higher for defense tech than other technologies.Machines are expensive(and complicated)to build,which can be a deterrent for investors.However,the companies that do find product market fit,tend to achieve exit velocity,given the large government contracts that

127、 tend to be lucrative and dependable.STATE OF THE MARKETS H1 202522Notes:1)Terms include“defense,”“instability,”“war,”and exclude“financial instability.”2)Defense tech includes all of PitchBooks analyst curated vertical:“Aerospace and Defense”as well as an SVB-curated list of VC-backed defense contr

128、actors.3)Post-money valuations for all disclosed deals.Source:CB Insights,PitchBook Data,Inc.and SVB analysis.5010015020025030020202021202220232024US corporate attention on defense and security is up 2x from what it was in 2020.$1.6B$2.1B$3.5B$5.4B$2.5B$5.2B$5.0B59%45%63%51%64%84%79%2018201920202021

129、202220232024Total VCTop 10 Largest Deals$21.4M$29.5M$6.5M$7.5MEarly StageLater StageDefense TechOther VC$0B$2B$4B$6B$8B$10B$12B$14B2015201620172018201920202021202220232024Exited UnicornsActive UnicornsThe 15 active US defense tech unicorns are valued at$50B.Seed extensions are capturing the highest

130、percentage of seed deals and capital ever witnessed.Starting with the 2015 seed cohort,extension rates(i.e.,the share of seed companies that raised an additional seed round)ticked up year by year,peaking for those that raised a seed in 2021.Graduation rates moved similarly to extension rates up unti

131、l the 2021 cohort.Following the 2021 class,graduation and extension rates started to tick down.On a relative basis,graduation rates fell faster than extension rates.This shift occurred for a number of reasons.First,seed cohorts from 2020-2021 raised in a growth-at-all-costs environment,whereas more

132、recent seed cohorts were forced to be capital efficient from day one.Second,the venture landscape recalibrated as investors pulled back,pushing graduation rates down and leading companies to depend on extension rounds.Third,the cohorts that raised in 2020-2021 need more time to reach the higher Seri

133、es A benchmarks expected of them.Lastly,seed companies are using extensions to kick the can down the road in hopes of raising a Series A at a better valuation.As a result of these trends,seed extension deal sizes and valuations continue to climb.Until those older cohorts work through the system,expe

134、ct graduation and extension rates to drudge along.STATE OF THE MARKETS H1 202523Notes:1)Seed extension defined as any seed round after the first seed for the specific startup.Source:PitchBook Data,Inc.and SVB analysis.20202021202220232024MonthsMonths2019Cumulative Seed Extension Rates 2015-2024Cumul

135、ative Graduation Rates 2015-20242015-20180%10%20%30%40%50%60%70%80%90%100%20152016201720182019202020212022202320240%10%20%30%40%50%60%70%80%90%100%20152016201720182019202020212022202320241st Seed2nd Seed3rd+SeedDeal CountCapital Invested$0.0M$0.5M$1.0M$1.5M$2.0M$2.5M$3.0M$3.5M$4.0M201520162017201820

136、1920202021202220232024$0M$2M$4M$6M$8M$10M$12M$14M$16M$18M2015201620172018201920202021202220232024Median Deal SizeMedian Pre-Money Val.1st Seed2nd Seed3rd+Seed0%5%10%15%20%25%30%03691215182124273033360%5%10%15%20%25%30%0369121518212427303336Extension rates increase from 2015-2021 before declining.201

137、5-2020 graduation rates moved in lock step with extension rates.2021 marked a divergence in that trend despite extension rates being above graduation rates on a relative basis.$35BCore-weave$9B$12B$11B$12B$23B$27B$29B$41B$36B$24B$46B1,1161,4291,3941,4191,5391,7391,8152,3392,0891,7001,321050010001500

138、20002500$0B$5B$10B$15B$20B$25B$30B$35B$40B$45B$50B20142015201620172018201920202021202220232024Rising interest rates in 2022-2023 sent ripples through the capital markets,curbing the appetite for debt among public tech companies.Yet in the startup world,venture debt is a key lever,compensating for a

139、slowdown in VC funding and providing critical runway extension.In the past,later-stage venture debt was a complement to equity.When it was a replacement to equity,it was due to the companys strong fundamentals,such as reducing burn.This could become a problem for companies and their lenders if the f

140、inancing was insufficient to achieve the milestones necessary to raise the next round,or if new investors are unwilling to see their new dollars go to repay debt.Venture-backed companies are also finding new ways of using debt.CoreWeave,for instance,turned to a collateral-backed facility for financi

141、ng compute.Historically,lenders pulled back during downturns,as those who invested heavily during the peak times realized losses.During this cycle,however,the opposite has occurred.New entrants,such as deep-pocketed private credit funds,are further increasing the competitive pressure,offering sweeth

142、eart deals to gain market share.Whats clear is that venture debt is no longer just a stopgap measure.STATE OF THE MARKETS H1 202524Notes:1)Sample includes companies listed on major US exchanges with a primary industry of“information technology.”Calendar years and quarters are shown.Averages use data

143、 winsorized at the 5th and 95th percentile.2)Q4 2024 data is extrapolated based on average quarterly data for Q1-Q3.3)The majority of companies in the dataset are later-stage.4)Data for 2024 includes Q1-Q3 only.Source:S&P Capital IQ,PitchBook-NVCA Venture Monitor(Q3 2024),PitchBook Data,Inc.,SVB pro

144、prietary data and SVB analysis.Average Median Deal ValueDeal CountDeal Value Linear TrendMedianAverage101111141213Q1 23Q2 23Q3 23Q4 23Q1 24Q2 2420242023202220212020201920182017201620152014$0M$1M$2M$3M$4M$5M$0M$10M$20M$30M$40M$50M20242023202220212020201920182017201620152014Median Deal SizeAverage Dea

145、l Size23%22%21%25%25%25%24%19%35%34%32%37%35%35%35%31%20192020202120222023Q1 24Q2 24Q3 24Extrapolation Average Driven Up by Large AI DealsSTATE OF THE MARKETS H1 202525 RETURN TO TABLE OF CONTENTSOne of the most common questions we hear from founders is“what are the benchmarks for raising capital?”U

146、nsurprisingly,the answer has changed over time.Revenue growth is no longer as important as it once was.In fact,the typical company raising a Series A is growing at 69%today.This is down from 171%YoY in 2021.Managing burn is of utmost importance today.Among companies that raised capital in 2024,the t

147、ypical Series B company only increased its burn 8%YoY.This means that companies are growing,but they arent growing their burn.Companies that are raising are increasingly efficient.This is vastly different from companies raising in 2021 and 2022 that rapidly grew burn YoY in an environment where capi

148、tal was easier to come by.At the Series A we have also seen a significant increase in the median revenue companies have at the time of raise.The median Series A company now has a whopping$2.5M in annual revenue 75%higher than companies had in 2021.This has coincided with more companies raising multi

149、ple seed rounds and a bottleneck of seed-stage companies seeking to raise a Series A.There were fewer Series A tech deals done in 2024 than at any point in the last decade those that are being done are the exception.STATE OF THE MARKETS H1 202526Notes:1)YoY growth rate comparing annualized quarterly

150、 values;does not include extension rounds.2)The annualized current run rate;does not include extension rounds.Source:SVB proprietary data,PitchBook Data,Inc.and SVB analysis0%20%40%60%80%100%120%140%160%180%201920202021202220232024$1.4M$5.0M$14.2M$2.5M$6.0M$13.8MSeries ASeries BSeries C75%20%-3%Seri

151、es ASeries BSeries C20212024Series ASeries BSeries C-50%0%50%100%150%200%250%300%350%2018201920202021202220232024Increase in Burn the Year Following the DealIncrease in Burn the Year Leading up to the Deal Starting Point(1 year Before Deal)Year of Venture RoundUnhealthy,Inefficient Increases in Burn

152、 Fueled by Too Much CapitalCompany burn stagnates as many companies continue to grow into their burn rates.-286%-171%-105%-71%-45%-21%-12%-3%-450%-400%-350%-300%-250%-200%-150%-100%-50%0%$1.0M$2.5M$5.0M$7.5M$10.0M$20.0M$50.0M$100.0MThe long and winding road that leads to profitability may be shorter

153、 today than in 2021.More companies are approaching profitability and doing so sooner in their life cycle.This is not to say early-stage companies are profitable far from it.The median VC-backed tech company with$1M in revenue has a profit margin of negative 286%.But as the YoY increases in burn sett

154、le near zero and revenue growth rates continue(albeit slower),companies continue to trend toward profitability.In fact,the median VC-backed tech company with$1M in revenue saw margins improve 119 percentage points since 2021.The trade-off of lower burn and higher profitability is slower growth.When

155、companies burn less,they spend less on marketing and expansion that drive the top-line growth.Therefore,in addition to exogenous factors like a slower economy and lower spending on new tech,growth rates have fallen.Balancing growth and profitability is a tightrope all companies walk,but many have be

156、en falling off.The median Rule of 40 fell in 2022 and 2023,as growth rate declines outpaced the improvements in profit margin.But 2024 marked an inflection point;growth rates leveled out and profitability continued to improve,which means companies are generally operating with better Rule of 40 metri

157、cs.STATE OF THE MARKETS H1 202527Notes:1)Year over year revenue growth.2)Revenue corresponds to bins:$1M-$2.5M,$2.5M-$5M,$5M-$7.5M,$7.5M-$10M,$10M-$20M,$20M-$50M,$50M-$100M.3)Rule of 40 is equal to revenue growth rate plus profit margin.Source:SVB proprietary data and SVB analysis.201920202021202220

158、232024$1M$2.5M$5M$7.5M$10M$20M$50M$100M$1M$2.5M$5M$7.5M$10M$20M$50M$100M0%20%40%60%80%100%201920202021202220232024-250%-200%-150%-100%-50%0%50%Company RevenueProfitability has improved,but back at 2019-2020 levelsCash has always been king.But right now,most startups cash reserves would be lucky to b

159、e a prince.As investment remains subdued,companies are feeling the pinch.Most have cut where and what they can,but without investing in growth or being able to raise another round,startups have started to see their reserves dwindle.Median runway for US tech startups has settled at 12 months in 2024

160、the lowest level since 2019.Furthermore,61%of startups saw their cash runway decline from the previous year,the second highest share since 2016.For those that have been fortunate enough to raise cash,theyre raising far fewer months of runway compared to previous years.On a median basis,startups are

161、raising nine months less of runway compared to the boom times of 2021.To be sure,some of this is supply driven with late-stage capital fleeing the ecosystem.It may also be demand driven,as startups have realized that all capital is not created equal,and there is such a thing as too much capital.Howe

162、ver,there are a mounting number of startups that need to raise in the coming months.Its estimated that half of cash-burning US tech startups will need to raise in the next year similar to 2019 levels.While 2025 has brought more optimism that checkbooks will open,some companies are still likely to be

163、 grounded on the runway.STATE OF THE MARKETS H1 202528Notes:1)Data for 2024 based on Q4 data where applicable.If Q4 is not available,then Q3 is used.2)Cash runway raised determined by using current burn rates for companies with 100%increase in cash balance from the previous quarter and the company r

164、aised an equity round.Source:PitchBook Data,Inc.,SVB proprietary data and SVB analysis.0%5%10%15%20%25%30%48Months of Cash Runway Bucket2019202020212022202320240 Mos.5 Mos.10 Mos.15 Mos.20 Mos.25 Mos.30 Mos.35 Mos.40 Mos.25th50th75th-14 Months-4 Months201920202021202220232024Share of Startups with D

165、ecreasing Runway YoYPercentile0%10%20%30%40%50%60%70%80%90%100%0369121518212427303336201920202021202220232024Months Until Need to Raise55%42%54%63%58%61%Q419Q420Q421Q422Q423Q424STATE OF THE MARKETS H1 202529Notes:1)Q4 used for each year except 2024 where Q4 is not available for some companies.In tho

166、se instances,Q3 is used instead.Source:SVB proprietary data and SVB analysis.5776661215141215122333282327292019 2020 2021 2022 2023 20246998771318181514122534342524252019 2020 2021 2022 2023 2024710109971418191614142736372420222019 2020 2021 2022 2023 2024577644101313131082025292218162019 2020 2021

167、2022 2023 2024577755111414131192125282218162019 2020 2021 2022 2023 2024917131214151834262327293674514568812019 2020 2021 2022 2023 2024688876121617141312243333242424201920202021202220232024Consumer InternetFintechEnterprise SoftwareFrontier Tech$0-$10M$10M-$25M$25M-$50M$50M+Median75th Percentile25t

168、h PercentileUS VC-Backed Startups711119991320221518212438392431352019 2020 2021 2022 2023 202471086981420181314142538322327262019 2020 2021 2022 2023 2024STATE OF THE MARKETS H1 202530 RETURN TO TABLE OF CONTENTSThe VC slowdown is testing startups resilience,particularly when it comes to managing de

169、bt.With less funding available,some companies are finding it harder to stay on track with repayments a trend that evokes parallels to the early pandemic period.Data suggests that at the end of 2023 and into 2024,more startups began having difficulty with debt repayments,a sign of financial trouble f

170、or these companies.While this peak has since eased,levels remain elevated,reflecting the ongoing adjustments many companies face in todays funding environment.For startups encountering financial strain,options are more constrained than in previous years.Acquisitions,whether full buyouts or tech-focu

171、sed deals,have become less frequent.An increasing number of companies are winding down entirely.Bankruptcy filings in Silicon Valley are on the rise,underscoring the harsh realities of operating in a capital-constrained environment.Macro headwinds in the funding environment are creating a critical t

172、urning point for many companies.An increasing share of VC-backed startups is showing no growth or profit,forcing many to confront hard choices about their future.As the startup ecosystem contends with this wave of financial fragility,the question remains:How many will sink before the tide turns?STAT

173、E OF THE MARKETS H1 202531Notes:1)Two-quarter moving average.2)Data for 2024 includes Q1-Q3 only.“Other”outcomes are excluded,so each year does not sum to 100%.3)Silicon Valley includes San Francisco,San Mateo,Santa Clara and Alameda counties.Data includes bankruptcies across industries.Source:US co

174、urts,SVB proprietary data and SVB analysis.Borrower Winds DownBorrower Is AcquiredDistressed Debt ResolutionRefinanceLoan Amortizes FullyBorrower Raises Equity9095100105110115120Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23Q4 23Q1 24Q2 24Q3 24IndexLinear Trend Since Q1 220%5%10%15%20%25%Q4 2018 Q4 2019 Q4 202

175、0 Q4 2021 Q4 2022 Q4 2023 Q4 2024050100150200250300350400Q1 20Q2 20Q3 20Q4 20Q1 21Q2 21Q3 21Q4 21Q1 22Q2 22Q3 22Q4 22Q1 23Q2 23Q3 23Q4 23Q1 24Q2 24Q3 24Chapter 7(Liquidation)Chapter 11(Reorganization)No Growth and No ProfitNo Growth,No Profit and Less than 12 Months of Runway15%13%13%14%23%32%29%23%

176、21%14%9%11%16%16%14%7%2%4%7%12%5%7%8%5%14%21%24%22%19%19%202020212022202320242018201920202021202220232024The herd of US VC-backed tech unicorns continues to grow,with few exiting,closing their doors,or taking a down round below$1B post-money.With the growth of the herd,so too comes growing demand fo

177、r liquidity.Secondary markets and M&A activity may provide some liquidity to unicorns,but IPOs will need to play a key role as well.But the IPO bar is higher today,and few unicorns surpass it.According to Jordan Saxe,who oversees Nasdaqs listings in the Americas,to IPO“companies need high ARR(more t

178、han$300M-$400M NTM ARR)and good Rule of 40.”Many US tech unicorns are simply too small to be likely IPO candidates.Thirty percent of US tech unicorns have less than$100M in annual revenue.An even greater percentage are growing too slowly to be a compelling IPO.Nearly half of US VC-backed tech unicor

179、ns are growing slower than 15%annually.Profitability is also an important factor.“You need to be profitable or have a clear path to profitability.If not,you will not get a warm reception from investors,”Saxe said.Even if we consider IPO benchmarks to be relatively low:over$100M run rate for revenue,

180、at least 15%YoY growth,and greater than negative 25%margin,only one quarter of the unicorn cohort are IPO hopefuls.But it is hard to know exactly what the benchmarks are today.They are certainly higher than they were in 2021,but few have exited to establish new benchmarks.Notes:1)Unicorn value is th

181、e last known valuation.Value of tech IPOs is the value at IPO.Source:SVB proprietary data,PitchBook Data,Inc.and SVB analysis.STATE OF THE MARKETS H1 202532Too Small:Revenue$100MToo Low Growth:Revenue growth 15%AnnuallyIPO HopefulsYears1%2%3%3%5%8%10%9%11%10%9%8%6%5%3%2%2%1%1%3%123456789 10 11 12 13

182、 14 15 16 17 18 19 2010.3 Yrs.Average Age of UnicornsUnicorns Created in 2021All Other Unicorns10.6 Yrs.Average Age of a Tech IPO$2.4TCurrent Value of All US VC-Backed Tech Unicorns$1.3TValue of US VC-Backed Tech IPOs at Time of IPO Since 201015 yrs.of IPOs released less value than the current value

183、 of US VC-backed tech unicorns.75%25%70%41%646Unicorns CreatedUnicorns Exited,Fallen,FailedTotal2015201620172018201920202021202220232024TotalEBITDA-25%Unprofitable:50100150200250300350400450500-900901802703604505406307208109009901080-100%0%100%200%300%400%500%Down Round IPOsDespite most investors ca

184、lling for a thawing of the exit market(including us),the IPO window barely cracked open a relative surprise considering US public markets were up 20%+in 2024.1 While the 2024 IPO cohort wasnt mighty in numbers,it was mighty in clout.Seemingly forever-private social media platform Reddit finally went

185、 public after eyeing an IPO for years.Notable startups like Rubrik,Pony.AI and ServiceTitan also went public.So,what gives?Notably,of the seven US VC-backed tech IPOs in 2024,four of them were down rounds a popular narrative among the investor community of why some startups dont want to exit.While d

186、own rounds seem unpleasant,theyre not uncommon.Additionally,it is far from the whole story.Successful companies(such as Block)have taken down round IPOs only to soar past previous private high-water marks.Its also worth noting that with war chests still fairly full,most late-stage startups might not

187、 need the capital(even though investors would benefit from the liquidity).Despite this,still look for tech startups to test public waters should markets remain favorable.One additional wrinkle that may pressure startups to go public is IPO ratchet structures,which put startups on the clock to go pub

188、lic to minimize dilution impact should they trade below the hurdle price.Notably,both Block and ServiceTitan(both down round IPOs)had ratchet provisions.STATE OF THE MARKETS H1 202533Notes:1)Based on the S&P 500 price return from 12/31/2023-12/31/2024.2)Company names in order of left to right:Astera

189、 Labs,Rubrik,Ibotta,Reddit,Pony.ai,zSpace and Service Titan.Performance data as of 12/31/2024.3)Last private valuation.4)Metric as of 1,080 days post-IPO.Company names in order of appearance:Coupa,Cardlytics and Block.Source:PitchBook Data,inc.,S&P Capital IQ,S-1 filings and SVB analysis.IPO/LPV3Cur

190、rent MV/IPOMedian:Low PeriodMedian:High PeriodMedian OverallAverage OverallShare of Down Round IPOsIPO DayLPV3989x42,695x4738x4-30%-10%10%30%50%201020112012201320142015201620172018201920202021202220232024Low PeriodHigh PeriodHigh PeriodLow PeriodSTATE OF THE MARKETS H1 202534Notes:1)Revenue growth d

191、etermined using latest annualized quarterly revenue at time of IPO.If quarterly data is not provided,then the available time frame provided by the company is used.Earnings before interest,taxes,depreciation and amortization(EBITDA)margins determined using latest quarterly data at time of IPO.2)VC-ba

192、cked determined using SVB analysis of previous equity rounds.3)Tech determined using SVB analysis and taxonomy.4)Revenue size determined using revenue level provided by PItchBook Data,Inc.Source:PitchBook Data,Inc.,S&P Capital IQ,S-1 filings and SVB analysis.201920202022-202320242021Bubbles Scaled t

193、o Revenue Size4-100%-50%0%50%100%150%200%250%300%350%400%-150%-125%-100%-75%-50%-25%0%25%50%Revenue Growth YoYEBITDA MarginUberRobinhoodDoorDashMaplebearLyftAirbnbPalantirToastCompassAppLovinPelotonCoinbaseTuSimpleCompanies are scraping to the bone when it comes to exhausting all options before expl

194、oring an acquisition.At least thats what it seems.To start,companies are being acquired closer to the end of their runway.Median cash runway at time of acquisition fell 35%to just below six months,dropping for the first time since 2019.Financials tell a similar story.Pre-pandemic revenue growth hove

195、red around 10%to 20%and EBITDA margins -80%to-100%at time of acquisition.Those figures(on a median basis)have slipped lower the past two years.In fact,revenue growth trends downward leading up to an acquisition.This is in stark contrast compared to the frothier times of 2020-2022.Revenue growth held

196、 fairly steady leading up to an acquisition,potentially suggesting that more deals were strategic rather than done out of necessity.In todays climate,more startups are likely forced to look for a new home and subsequently lose revenue sources leading up to that.Another data point that supports this

197、thesis is the share of deals that report a valuation.Out of nearly 900 US VC-backed M&A deals done in 2024,only 18%disclosed a purchase price.1 While data may be backfilled as more information becomes available,its unlikely this number will reach peaks of previous years.In part,this is attributed to

198、 the fact startups are getting acquired for much less than what they raised and were valued at.See our previous analysis from last years State of the Markets here.STATE OF THE MARKETS H1 202535Notes:1)VC-backed determined using SVB analysis of previous equity rounds.2)Revenue growth determined by an

199、nualizing a companys revenue on its most recent statement.Source:PitchBook Data,Inc.,SVB proprietary data and SVB analysis.82%75%82%76%65%64%80%4.1 Mos.4.5 Mos.2.7 Mos.6.1 Mos.7.4 Mos.8.4 Mos.5.5 Mos.2017201820192020202120222023-2024-140%-120%-100%-80%-60%-40%-20%0%0%10%20%30%40%20172020202120222023

200、-202420182019Revenue Growth YoYEBITDA MarginRunway at PurchaseShare with Less than 12 Mos.Runway51%50%46%25%33%27%33%22%37%31%15%12%4 Quarters Prior3 Quarters Prior2 Quarters Prior1 Quarter Prior2018-20192020-20222023-202420192024202220232020202131%18%26%22%30%36%$0.0T$0.2T$0.4T$0.6T$0.8T$1.0T$1.2T$

201、1.4T200020022004200620082010201220142016201820202022202412%16%73%With the growth of unrealized returns and limited exit activity,GPs,LPs and employees are hungry for liquidity.“Momentum is building within the ecosystem for alternative paths to liquidity,”says Eric Thomassian,Head of Private Company

202、Relations at Forge Global.Enter secondary markets.GPs of venture firms are selling down positions to reduce exposure to bets placed in 2021,and to boost DPI before their next fund.In some instances,smaller GPs are selling off their entire portfolios.GPs at asset managers and hedge funds are using se

203、condaries as an off-ramp for private exposure and reducing growth investing.Some LPs like family offices,pension funds and endowments are selling co-investments and fund interests.While employees are selling options.But the secondary market is challenging,with its limited price transparency,ineffici

204、ent price discovery,extended settlement cycles,high transaction costs and stock transfer restrictions.That said,it is increasingly more transparent and accessible with the rise of secondary exchanges like Forge Global,Nasdaq Private Markets and others.Furthermore,the growth of VC-specific secondary

205、funds creates more opportunities for transaction.While secondary transaction volumes are elevated,73%of investors have not participated in secondary markets.There is still a lot of opportunity for growth as markets become more liquid and efficiency improves.STATE OF THE MARKETS H1 202536Notes:1)Tota

206、l unrealized returns in the US innovation economy as of year end;2024 data as of March 2024.2)Data smoothed using trailing six months.3)Pitchbook Data,Inc.survey of global venture investors from 2024.Source:Forge Global,Preqin,PitchBook Data,Inc.and SVB analysis.No,we do not participate in secondari

207、es.Yes,we are buying through secondaries.Yes,we are selling through secondaries.050100150200250Mar.20Jun.20Sep.20Dec.20Mar.21Jun.21Sep.21Dec.21Mar.22Jun.22Sep.22Dec.22Mar.23Jun.23Sep.23Dec.23Mar.24Jun.24Sep.24-70%-60%-50%-40%-30%-20%-10%0%10%20%Jan.21 Jul.21 Jan.22 Jul.22 Jan.23 Jul.23 Jan.24 Jul.24

208、75%of funds since 2015 have a DPI less than 25%.37Marc CadieuxPresidentSVB Commercial BankSilicon Valley BEli OftedalSenior Analytics ResearcherSVB Market InsightsSilicon Valley BMark Gallagher Head of Investor CoverageSVB Commercial BankSilicon Valley BJosh PherigoSenior Analytics ResearcherSVB Mar

209、ket InsightsSilicon Valley BAndrew Pardo,CFASenior Analytics ResearcherSVB Market InsightsSilicon Valley BMarc Cadieux is president of Silicon Valley Banks commercial banking business where he focuses on the needs of innovation companies at all stages of development,including the investors who back

210、them.Marcs career at Silicon Valley Bank,a division of First Citizens Bank,began in 1992.In the three decades since,he has held a variety of top credit and sales roles serving some of the worlds most innovative companies.Most recently,he served as chief credit officer,appointed in 2013,and oversaw c

211、redit policy and process,credit underwriting,loan approval and portfolio management activities.He is a strong advocate of bank initiatives to expand opportunities for those who are underrepresented in the innovation economy.He serves as an executive sponsor for the companys employee resource group f

212、ocused on women employees.Mark Gallagher is the co-head of the investor coverage practice.He and his team provide tailored services,industry insights and strategic guidance to top investors in the innovation economy.Mark has served as a financial partner to venture capital firms and technology and l

213、ife science companies for the majority of his career.During his 22-year tenure with SVB,he has been involved in a number of strategic projects and initiatives,most recently leading the corporate venture capital practice.Hes held numerous leadership roles including head of the Northeast technology ba

214、nking practice,head of business development in New England and several years running the Northeast life science practice.A supporter and champion of the New England technology community,Mark serves as a board member for BUILD Boston and was formerly on the board of overseers for The Mass Technology

215、Leadership Council(MTLC).STATE OF THE MARKETS H1 2025Jake Ledbetter,CFASr.Analytics ResearcherSVB Market InsightsSilicon Valley BSilicon Valley Bank(SVB),a division of First Citizens Bank,is the bank of some of the worlds most innovative companies and investors.SVB provides commercial banking to com

216、panies in the technology,life science and healthcare,private equity and venture capital industries.SVB operates in centers of innovation throughout the United States,serving the unique needs of its dynamic clients with deep sector expertise,insights and connections.SVBs parent company,First Citizens

217、 BancShares,Inc.(NASDAQ:FCNCA),is a top 20 U.S.financial institution with more than$200 billion in assets.First Citizens Bank,Member FDIC.Learn more at .Silicon Valley B See complete disclaimers on following page.2025 First-Citizens Bank&Trust Company.Silicon Valley Bank,a division of First-Citizens

218、 Bank&Trust Company.Member FDIC.38STATE OF THE MARKETS H1 202538The views expressed in this report are solely those of the authors and do not necessarily reflect the views of SVB.This material,including without limitation to the statistical information herein,is provided for informational purposes o

219、nly.The material is based in part on information from third-party sources that we believe to be reliable but which has not been independently verified by us,and,as such,we do not represent the information is accurate or complete.The information should not be viewed as tax,accounting,investment,legal

220、 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

221、of any investment,or to engage in any other transaction.All non-SVB named companies listed throughout this document,as represented with the various statistical,thoughts,analysis and insights shared in this document,are independent third parties and are not affiliated with Silicon Valley Bank,divisio

222、n of First-Citizens Bank&Trust Company.Any predictions are based on subjective assessments and assumptions.Accordingly,any predictions,projections or analysis should not be viewed as factual and should not be relied upon as an accurate prediction of future results.Investment Products:Are not insured by the FDIC or any other federal government agencyAre not deposits of or guaranteed by a bankMay lose value2025 First-Citizens Bank&Trust Company.Silicon Valley Bank,a division of First-Citizens Bank&Trust Company.Member FDIC.39STATE OF THE MARKETS H1 202539