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Quarterly Investment to US VC-Backed Companies Increased 2%, Reaching $23B, According to the PwC/CB Insights MoneyTree Report

 

Overall US Deal Activity Increased 9%

Asia funding continues to rise, with 10% increase from Q1’18

 

NEW YORK, July 12, 2018 – As global deal activity continues to rise, the second quarter of 2018 saw in an increase in funding to VC-backed companies based in the United States and generated $23B in funding, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and CB  Insights.

The United States recorded its third consecutive quarter with over 30 mega-round activity of $100M or more, resulting in 45 mega-rounds in Q2’18 and continuing the trend of larger deals. However, mega-rounds declined as a percentage of total VC funding to 34%, the second straight quarterly decline. The overall deal activity among VC-backed companies in the US increased by 9%.

Deal activity looks to be resurgent with $23B invested in VC-backed startups setting a new quarterly funding high since the start of this century, while also increasing activity to over 1,400 deals. Additionally, 2018's mega-rounds are currently on pace to beat what was an unprecedented 2017 -- which posted 111 mega-rounds."

Tom Ciccolella, US Venture Capital Leader at PwC

Regionally, in the United States, San Francisco generated the most number of deals (271 deals), while Silicon Valley (South Bay) decreased in deal activity (166 deals). However, San Francisco saw a 14% decrease in funding between Q1’18 and Q2’18, dropping to $5.6B. Deal activity in New York increased quarter-over-quarter (193 deals), while funding remained flat.

As global investment activity continued to increase, Asia saw an explosive growth of mega-rounds, unicorn births, and deals during Q2’18. During this quarter, there were 5 new unicorns, as well as a 36% increase in deal activity in Asia alone. Additionally, total quarterly funding to Asia-based companies increased by 10%.

“Global deal activity remained strong with venture investment into Asian companies being particularly robust (funding grew 10% from Q1 to Q2).  Asia is seeing lots of local and cross-border investment, and we expect this continue,” said Anand Sanwal, CEO and co-founder of CB Insights. “The growth in mega-deals (those over $100M) also highlights the immense amounts of capital that is pouring into the private company market.”

Key Q1 2018 highlights:

 

  • The US market continued to see strong funding growth as dollars to VC-backed companies went up 2% in Q2’18 over the previous quarter, with $23B invested across 1,416 deals. Deal activity also increased for the second quarter in a row, up by 9%. This is the second straight quarter of increased deals and dollars.
  • First venture financings as a share of all US deals rose to 35% of the total in Q2’18. Corporate participation in US deals also increased slightly in Q2’18, to 26% of US deals to VC-backed companies.
  • US-based companies saw another massive quarter for mega-rounds, recording 45 rounds of $100M or more. However, mega-rounds declined as a percentage of total VC funding to 34% -- the second straight quarterly decline.
  • Investment deals and dollars increased significantly for Artificial Intelligence and Fintech companies, as total funding rose by 21% over 124 deals and 40% over 142 deals, respectively. Specifically in AI, the quarter was led by later stage deals to companies such as Dataminr ($392M Series E) and CrowdStrike ($200M Series E).
  • Cybersecurity funding in the US also increased for the first time after a three-quarter decline. $1.7B was invested across 65 deals in Q2’18. California was the top state in deals for this industry, with 27 deals completed in Q2’18.
  • Globally, $50.9B was invested across 3,564 deals, a 17% increase in deal activity. Mega-rounds also increased significantly in North America and Asia, as Asia mega-round activity increased to 40, up from 29 in Q1, and North America saw 46 mega-rounds. And, for the third quarter in a row, North America saw an increase in deal and funding activity.
  • Asia saw an impressive growth in both funding and deals. Total quarterly funding to Asia-based companies increased 10% in Q2’18 as $21.2B was invested across 1,300 deals, compared to $19.1B and 955 deals in the previous quarter. Some of the companies that led Asia’s biggest deals include Manbang Group of China ($1.9B) and Grab of Singapore ($1B).
  • New unicorn births jumped in Asia to 9 new companies valued at $1B or more. Europe and North America also saw growth in new unicorns, rising to 4 and 6, respectively. New unicorn companies include Ginkgo BioWorks, Bloom Energy, and Infor.
  • Silicon Valley (S. Bay) deal activity declined to 166 deals in Q2’18, down from 170 in Q1’18. Total funding for Silicon Valley companies remained flat, at $3.9B. Los Angeles and Orange County deal activity also declined to 98 deals, down from 109 in Q1’18. While San Francisco’s funding activity decreased from $6.5B to $5.6B, its deal activity increased from 260 to 271 deals.
  • New York saw an increase in deal activity, while funding stayed flat at $2.7B. New England funding increased for the fourth-straight quarter, with an increase of 6.5% in total quarterly funding.

MoneyTree Report results are available online at www.pwcmoneytree.com.

CB Insights research can be found online here.

 

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©2018 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

About CB Insights

CB Insights is a Pilot Growth and National Science Foundation backed software-as-a-service company that uses data science, machine learning and predictive analytics to help our customers predict what’s next—their next investment, the next market they should attack, the next move of their competitor, their next customer, or the next company they should acquire. The world’s leading global corporations including the likes of Cisco, Salesforce, Castrol and Gartner as well as top-tier VCs including NEA, Upfront Ventures, RRE, and FirstMark Capital rely on CB Insights to make decisions based on data, not decibels.

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