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  • Neventa Capital

The Impact of COVID-19 on Private Markets

The impact of the global COVID-19 pandemic has been devastating. It has disrupted the way of life and the economy the world had grown accustomed to over the past decade. While the effects of the economic turmoil brought about by the pandemic on public markets has been well documented and discussed in the media, private markets have not been as widely evaluated or covered. Notable impacts and trends have emerged in the volume and size of private equity (PE) and venture capital (VC) deals over the first quarter of 2020. The impact of such a widespread and unanticipated pandemic has ravaged some sectors while bringing into the spotlight some others. For the purpose of this article, all data is extracted from Pitchbook.

The total value of private market deals is up notably since Q1 of 2019 due to a rapid increase in median deal sizes over the past year. The Q1 2020 deal count has seen an accelerated decline resulting from the virus. Q1 of 2020 saw 2,235 fewer deals (7605) and a decrease in median deal size of €2.8 million (53.4 m) compared with Q4 of 2019 . Despite the drop in median deal size and total deal value in Q1 of 2020, both metrics are still markedly higher than Q1 of 2019 and Q3 of 2019.

In Q1 2020, early stage rounds decreased in volume, as investors attempt to limit risk by avoiding young companies, while later stage rounds in more established companies grew in size. Angel investments have remained resilient, increasing in number by 9% in March, with only a slight decrease in the number of deals and the median deal size during Q1. Despite the strength in the Angel Investment space, Seed and Series A funding rounds saw dramatic decreases in counts, falling 43% and 36%, respectively, over the past quarter. Series B rounds rose dramatically in number, increasing 70% in the most recent quarter, despite a modest decrease in the month of March. Other growth rounds (Series D onwards) also performed well, not seeing dramatic decreases in total deal value performed thanks to larger deal sizes in Q1 2020. LBO and corporate venture capital deals were not as resilient, as all three saw declining levels of growth in deal volume, median size, and total deal values. M&A deals, conversely, saw an impressive €13 billion increase in total deal value over the same period.

Across most sectors, accelerated declines in deal sizes and counts over the past month and quarter have resulted from the economic implications of the COVID-19 pandemic. However, a handful of sectors and subsectors have experienced positive results of the drastic societal changes that have taken place.

The Winners:

The technology sector has performed well relative to other sectors given the current macro conditions in the private markets. Particularly in the digital technology space, such as SaaS, AI & ML, internet of things, e-commerce, and fintech, has become extremely evident as consumer and business supply chains, communication, and financial management have been disrupted. This disruption and the abrupt move to working and staying at home have acted as a catalyst, allowing technology deal counts to remain on pace with previous quarters’ rates. Deal sizes continue to increase as the “stay-at-home” economy boost revenues and market shares of earlier stage companies.

Healthcare and life science companies in private markets have seen notable declines in deal counts, with large increases in deal sizes over the past month, quarter, and when compared to Q1 of 2019. These deal size increases are likely the result of investments in technologies that are of potential use in the COVID-19 situation, in which case the flow of investment towards those certain applications and away from the multitude of others could explain the decrease in deal count, which occurred despite the weight of healthcare relative to the entire market increasing since Q1 2019. Regardless of the decrease in deal frequency, the exceptional performance of the pharmaceutical and biotech companies within the greater sector warrant considering the sector as a whole to be a winner.

Despite strong performance over the past year in deal sizes, commercial and industrial companies, such as property services, transportation services, and manufacturing of industrial equipment, have seen drastic decreases in deal sizes and accelerated decreases in deal counts during Q1 and March of 2020. As global economies continue to suffer from the effects of the pandemic, the industrial and commercial links in global supply chains could see even more drastic decreases, but their fantastic increase in total deal value compared to Q1 of 2019 is much better than other major sectors and provides a bit of cushion for the effects of the current situation.

The Losers:

Predictably, the brick-and-mortar components of the consumer goods sector have been particularly hard hit by the COVID-19 situation, dragging on the performance of the wider consumer goods sector. Notable exceptions include essential goods and retailers such as foods, supermarkets, and hardware. Despite generally good performance and rising deal sizes over the past year, deal counts and deal sizes for both durable and non-durable goods saw notable decreases in the month of March.

Banks, financial services, and capital markets companies have experienced both declining deal sizes and deal counts over the past year, which has been generally accelerated by the current economic downturn over the past quarter. Increasing digitalization in the space has pushed increased deal sizes towards fintech companies and away from more traditional components of the financial sector.

An unexpected dichotomy emerged in the energy and chemicals sector and has been magnified over the past quarter and month. This sector was extremely impacted by plummeting oil prices coupled with the current economic downturn. Conversely, companies producing gas and chemicals have seen explosive growth in deal sizes and a flattening rate of decrease in deal numbers.


In general, underlying market trends that have been present in the private markets deal space over the past few years have persisted and accelerated in effect due to the COVID-19 pandemic. The emerging exceptions to these macro trends mirror many of the subsectors performing well in public markets. Subsectors that have seen positive deal trends during the COVID-19 Pandemic include digital technology, such as software, fintech, AI & ML, internet of things, and e-commerce, pharmaceuticals, and biotech. The necessity for innovations related to the societal and medical changes resulting from the pandemic have acted as a catalyst for growth within these specific subsectors.

The current global situation is unlike anything the world has experienced in nearly a century. The economic impact of the pandemic will affect every market, industry, and company in some manner. The private markets have seen much turmoil across numerous sectors. As a reflection of the immense technological innovation and integration in the modern world, the sectors that innovate and help to relieve the current situation will emerge as market leading sectors in the private markets. As investors move forward in the current private market environment, due diligence is truly more important than ever before.


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