Venture capital investments in the first quarter of 2020 stayed strong, but with the COVID-19 pandemic causing economic chaos, investment levels are likely to weaken for the rest of the year.

That’s according to the quarterly PitchBook-NVCA Venture Monitor report released today. For the quarter ending March 31 there were 2,298 venture capital deals totaling $34.2 billion. Those figures are nearly identical to the fourth quarter of 2019, which also saw $34.2 billion invested but on a slightly lower 2,215 deals.

The quarter saw the maintenance of the record-high levels of capital raised by VC funds in 2018 and 2019, although that figure started to shift towards the end of March with the the coronavirus pandemic taking hold. Valuations remained strong during the quarter, with median early-stage deal value reaching an all-time high in the quarter.

Late-stage funding once again dominated the overall quarterly figure, with $23 billion invested with 49 late-stage VC megadeals over $100 million+ closing in the first quarter.

The report warns that the amount invested in the quarter ahead will shift because of macroeconomic realities and widespread market volatility as the coronavirus weighs on dealmaking. That will also cause a shift to lower deal valuations and terms in favor of investors for the first time in years.

On the exit side, there were 183 deals totaling $19.3 billion in the quarter, lower than the average quarterly figure across 2019 but one described in the report as robust. There were 10 deals over $500 million during the quarter.

Acquisitions accounted for the majority of exits, the first time they’ve surpassed initial public offerings since 2016. Topping the list for the quarter were Visa Inc.’s $5.3 billion purchase of Plaid Financial Inc. Jan. 13 and Alphabet Inc.’s acquisition of Looker Data Sciences Inc. for $2.6 billion Feb. 13.

The decline in IPOs is blamed on COVID-19. The report states that volatility stemming from the pandemic is expected to remain through the rest of the year as the IPO window for private businesses is linked to the conditions in the public market. Notably, there were only 13 VC-backed IPOs following the global financial crisis in 2008 and 11 in 2009.

“Despite these unprecedented times, the first quarter of the year saw healthy venture activity,” John Gabbert, founder and chief executive officer of PitchBook, said in a statement. “That said, there are still uncertainties as to what the next few quarters of the year will hold as we navigate the coronavirus pandemic and its full effects on the venture ecosystem,”

Gabbert added that “although U.S. VC dry powder sat at a record $121 billion as of mid-year 2019, suggesting that there is plenty of capital available for firms to weather the storm, VC firms will need to evaluate situations on an individual basis as differing aspects such as sector focus will largely determine their ability to support portfolio companies.”

Photo: Coolceaser/Wikimedia Commons