PitchBook Analyst Note: Crossing Over Into Venture

How crossover investors are making an impact on VC ecosystem

As companies wait longer to go public, prudent crossover investors have increasingly turned to private deals as an investment strategy over the past 10 years.

Crossover investors participated in nearly $60 billion of venture capital allocated in 2020—accounting for a record 36% of total deal value. PitchBook's latest analyst note explores why companies are increasingly seeking crossover capital and how the trend is likely to affect VC exit strategies. Among the takeaways:
 

• The median and average crossover round sizes are significantly larger than traditional venture financings because most deals tend to go to late-stage companies that can presumably secure a vote of confidence from public market investors.

 

• In 2020, nearly 75% of IPOs included crossover investment in pre-IPO rounds, signaling credibility to the cap table and a tangible valuation for the company.

 

• Crossover investors are often rewarded with the ability to purchase significant ownership in these growing businesses during pre-IPO rounds—and typically at a discount to the eventual IPO price.