While Overall Deal Activity Declined 4% Year-over- Year,
2017 Establishes Mega-Round Investment Record
109 Rounds of $100M or More Were Completed, Accounting for 36% of Funding
NEW YORK, January 10, 2018 – Annual funding to VC-backed companies based in the United States increased 17% over 2016, marking the second year on record with total dollar funding over $70B in this century, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and CB Insights.
In 2017, $71.9B was invested in US VC-backed companies as mega-round activity of $100M+ financings hit an annual high of 109, topping the count of 107 in 2015. This healthy funding total was spread across relatively fewer deals, with 2017’s tally of 5,052 down 4% from 5,268 in 2016 and representing the lowest annual total since 2012.
“2017 was a year of records for the VC ecosystem in this millennium,” said Tom Ciccolella, PwC's US Venture Capital Leader. “In the US, we saw a record number of mega-rounds driving the third highest level of investment in VC-backed startups. Globally, we saw the highest level of financing, driven by several billion dollar deals from Asia. The US venture capital ecosystem is also changing in terms of the mix of dollars and deals with a bigger role for mega-rounds, larger average deal size and a declining trend in deal count.”
Regionally, several major hubs saw an increase in funding in Q4’17 despite a decline in deal activity. San Francisco (N. Bay Area) funding increased 23%, while deal activity declined 19%, and Silicon Valley (S. Bay Area) saw funding increase 18% despite a 9% decrease in deals.
Globally, total funding for full-year 2017 reached $164.4B, a 50% increase over 2016, and an 11% increase in deal activity. Both deal and dollar activity surpassed the highs seen in 2015 amid strong Asian and European investment. Funding activity surged in Asia by 117% with $70.8B in total investment, up from $32.7B in 2016 and nearly matching the US figure. Asia deal count was up 46% to 2,847. Europe deal and dollar activity also saw growth, with funding rising by 40% in 2017 to $17.6B and deal activity increasing by 16% to 2,483.
“2017 closed strong because of mega-round activity - a theme throughout the year. It was a record year for these mega-rounds and was driven by what we'd describe as the Softbank Effect. This is the entry of large, deep pocketed investors, ranging from Softbank to sovereign wealth funds from around the globe investing in insurgent startup companies," stated Anand Sanwal, co-founder and CEO of CB Insights. "It is worth noting the pullback in early stage activity and the decline in overall deal activity as compared to recent years. Deals are still being completed, especially the bigger ones, but the early-stage activity which is vital to the VC ecosystem's health did take a hit. There is a lot of early stage (seed capital) that has been raised so it's likely to bounce back."
Key 2017 and Q4’17 highlights:
MoneyTree Report results are available online at www.pwcmoneytree.com.
CB Insights research can be found online here.
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