Annual Investment in US VC-Backed Companies Increased 17% in 2017, Reaching $71.9B, According to the PwC/CB Insights MoneyTree Report

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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:

  • Driving the strong US funding total was a record number of 109 mega-rounds, edging out the count of 107 in 2015. Mega-rounds accounted for 36% of 2017 US funding, just shy of the 37% high in 2015.
  • Corresponding with the broader deal slowdown, US seed deal share slid to an 8-quarter low of just 22% in Q4’17. Seed share crested 30% every quarter through Q1’17, but has not reached that mark since.
  • Four VC-backed companies achieved a valuation of $1B or more in the US in Q4’17. Through full-year 2017, 22 new unicorns were created in the US, up from 2016 but significantly below the peak of 41 in 2015.
  • Funding to AI topped $1B every quarter through 2017. Compared to 2016, total annual funding increased 28% in 2017 to a total of $5B across 444 deals.
  • Total annual global funding increased nearly 50% in 2017, as over $164B was invested across 11,042 deals. Deal activity was up by 11%, with both deal and dollar figures representing annual highs.
  • Asia and Europe financing activity saw strong full-year growth. Total annual Asia funding activity surged by 117%, with $70.8B invested across 2,847 deals in 2017, up from $32.7B and 1,950 deals in 2016. Total annual Europe funding activity stood at $17.6B across 2,483 deals, respectively up 40% and 16% from 2016.
  • New York Metro financing activity returned to Q2’17 levels, while Silicon Valley saw more funding. Deal activity in the NY Metro area declined from 184 deals to 177 deals this quarter. Absent the $2B+ funding to WeWork in Q3’17, total NY Metro quarterly funding declined by 33%. Silicon Valley total quarterly funding increased by 18% to $2.6B, with 4 mega-rounds of $100M or more.
  • San Francisco funding jumped even as deal activity declined. Total quarterly funding to San Francisco-based companies increased 23% in Q4’17 reaching $5.1B. Deal activity declined 19% over the same period, decreasing from 260 deals in Q3’17 to 210 deals this quarter.

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

CB Insights research can be found online here

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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