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Despite some heightening uncertainty in the US economy and public markets, the VC market in the US continued to see solid levels of investment during Q3’19, led by the $785 million raise by e-cigarette maker Juul.

While there were no billion dollar deals this quarter, the US continued to see numerous megadeals valued between $100 million and $500 million. These deals occurred across a wide variety of sectors, including financial services, mobility, automotive, healthcare, insurance, and others. Both the breadth of investments and the geographic diversity of companies attracting investment likely helped buoy the VC market in the country.

After 20 unicorn births during Q2’19, Q3’19 saw an additional 19 companies reach unicorn status in the US, including Checkr, Shape Security, Rivian, and Sondor. The continued high number of unicorn births reflects both the ongoing focus of VC investors on late stage deals and increasing valuations given the significant competition for the highest quality deals.

AI-focused companies accounted for more than a quarter of this quarter’s new unicorns, with Scale AI, DataRobot, Argo AI, Icertis, and Anduril all becoming unicorns during Q3’19. Outside of the new unicorns, a number of other AI companies attracted large investments during Q3’19, including ThoughtSpot ($248 million) and LucidWorks ($100 million). Given the broad applicability of many AI solutions, AI-focused companies are expected to remain very attractive to VC investors over the next few quarters.

Trends to watch for in the US

While the economic outlook heading into 2020 is not as bright as it has been in recent years, with plenty of capital still available, VC investment in Q4’19 and the early part of 2020 is expected to remain relatively stable.

In the US, many investors will be watching the longer-term performance of companies that issued IPOs early in 2019. While Uber’s performance might not be easily relatable to other companies, the ongoing results of companies like Beyond Meat, Zoom, Slack, and Lyft are more likely to impact investment decisions moving into 2020. VC investors in the US are also expected to increase their focus on companies that are profitable or that have a good story as to when they will become profitable.

At a technology and industry level, AI is expected to remain a very hot area of VC investment, in addition to fintech, transportation, healthtech, and cybersecurity.

Venture financing in the United States 2012-Q3'19
Venture Pulse Q3'19 - US quote by David Pessah
Venture Pulse Q3'19 - US infographic