Technology venture capital investment worldwide dropped for the first time since 2012 last year, as investors were spooked by hi-profile abortive IPOs and China’s slowdown.
Venture capital investment fell globally in 2019 from $302bn (£231bn) the year before to $258bn, according to figures compiled by financial data provider PitchBook for The Telegraph.
The number of deals also fell slightly from 22,807 in 2018 to 21,723 last year.
The tech boom of the 2010s and surging investment in China has seen venture capital – the primary funding sources for potential tech unicorns, companies with valuations of $1bn or more – rise steadily over the past decade.
Between 2011 and 2017, total VC investment rose from $67bn to $181bn worldwide.
However, Rob Kniaz, co-founder of London-based Hoxton Ventures, told The Telegraph that 2018 was an outlier, fed by the arrival of the Vision Fund, a $100bn VC investment vehicle run by Japan’s SoftBank and backed by Saudi Arabia.
Several SoftBank-backed companies, including WeWork, ran into trouble last year with overconfident valuations as they tried to float on the stock market.
SoftBank had to rescue WeWork after the office-sharing company failed to entice Wall Street Banks to invest in its £47bn (£35bn) flotation. Other failed bets on Uber dragged SoftBank to its first quarterly loss in 14 years. The firm’s chief Masayoshi Son in November admitted poor investment judgement.
And now Steve Eisman, the investor played by Steve Carrell in the Hollywood movie The Big Short – and who predicted the financial crisis of 2008 – is betting against SoftBank in 2008 by shorting the fund’s shares.
Meanwhile, the Chinese market has cooled as technology venture capital investors lost confidence in bicycle sharing firms and electric vehicle manufacturers, and fewer start-ups went public.
Chinese investment in America also fell due to an increasingly hostile US regulatory environment and trade tariffs on Chinese imports.