Venture capital spending hits all-time high in 2018, eclipsing dotcom bubble

Last year, the highest amount of VC-backed companies entered the public markets since 2014, according to the report. Venture capital exits hit $120 billion — a 33 percent increase from 2017, largely thanks to IPOs and buyouts.

Market conditions could throw a wrench in that this year. Stocks are sputtering out of the longest bull market since World War II and investors are worried about a dampening global economic picture, trade uncertainty, and a U.S. government shutdown.

“If we see investors switch sentiment from ‘greed’ to ‘fear,’ many growth stories priced for future perfection may continue to rely on private capital to avoid pricing in that environment,” Silicon Valley Bank CEO Greg Becker said in the report.

The government shutdown may also slow things down for companies looking to IPO in 2019. In order to list on a public exchange, companies need to file paperwork with the Securities and Exchange Commission — one of the agencies shut down until a government spending bill is signed. Pitchbook’s Stanhill said that some companies that had been aiming to list in January are being forced to push back those plans.

Plenty of unicorns, or companies valued at more than $1 billion, have indicated that they plan to go public this year. Venture-funded Airbnb, Uber, Lyft, Pinterest, Slack and Palantir are all on the watch list.

Regulation is also expected this to be a growing topic and possible concern for the venture industry, according to Pitchbook.

The report highlighted new foreign investment legislation — the Foreign Investment Risk Review Modernization Act, or FIRRMA — which expanded the scope of the Committee on Foreign Investment into the United States to include minority investments in U.S. companies. That regulation is already causing “friction” around the fund formation and companies’ financing process, the report said.