Sapphire Ventures: 86% of VCs Benefitted from Covid. And Often 1 Big Winner Made the Difference.

Sapphire Ventures (an LP in SaaStr Fund) just put out an interesting report on how the VC funds they’ve invested in (many top ones, almost all B2B) fared after Covid.  It’s mostly as you’d expect:

The Black Swan Year: How 2020 Impacted Venture Investing and Performance

A few interesting learnings:

  • 2020 started with about half their VC managers up, and half down.  And in 2019, only 26% of their fund managers reported a 5%+ value change.
  • But then things came roaring forward in the summer of ’20. 86% of their funds saw an uptick in valuation in Q3, and while they don’t have all the Q4 data yet, it could be even higher including Q4.
  • Among the top funds (up 3x+), 50% of the gains were from 1 top investment.  One.  Power laws, indeed.  One big winner continues to make most smaller funds.

Finally, it’s interesting to note that despite the explosion of Unicorns and SaaS leaders outside the U.S., their managers as a group stayed steady at 14% of investment outside U.S. in 2020 … the same as 2019.

But California funds continued to look outside of the Bay Area.  California-based VCs in their portfolio invested 43% of their new investments outside California, up from 29% in 2016.  That’s interesting to see quantified.

Crazy times in SaaS and Cloud indeed.

(note:  Sapphire Ventures is an LP in SaaStr Fund)

Published on February 4, 2021

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