MoneyTree™ News

Quarterly Investment in United States VC-Backed Companies Tops $18B Amid Strong Mega-Round Activity, According to the MoneyTree Report

 

Dollar funding rose 27% from Q1 with 72% more mega-rounds of $100 million or more, although deals slipped 4% 

NEW YORK, July 12, 2017 – Quarterly dollar funding to VC-backed companies based in the United States rose to the highest level in a year, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and CB Insights.

In Q2 2017, investors deployed $18.4 billion to US VC-backed companies across 1,152 deals, jumping 27% in dollars from Q1 2017 but dipping 4% in deal terms. Funding activity was driven by a strong surge in mega-rounds of $100 million or more, with Q2 2017’s tally of 31 representing the highest total since the peak of 36 in Q3 2015. Meanwhile, deal activity remains in a lower range from the nearly 1,500 deals completed in Q3 2015. 

"Q2 was a tale of two trends. US deal activity continued its multi-quarter downward trend, but the growth rate of investments in dollar terms accelerated from the first quarter. A surge in Mega-round deals, to the second highest level seen to date, helped drive a robust level of quarterly VC funding."

Tom Ciccolella, US Venture Capital Leader at PwC

Regional deal activity was down from Q1 2017 across most major hubs, with the notable exception of LA/Orange County, which saw both deals and dollars rise for the second consecutive quarter. Although deal activity was down across both New York Metro and Silicon Valley (South Bay Area), both regions saw 8-quarter quarterly funding highs amid prominent mega-round financings.

Globally, deals were up 2% from Q1 2017 to a total of 2,439, but funding spiked 53% to an 8-quarter high of $42.9 billion, surpassing the $40.6 billion seen in Q3 2015. Even moreso than the US, Asia’s saw total funding was buoyed by several massive financings, with its five largest deals accounting for over $10 billion dollars in aggregate. Europe also saw quarterly funding hit an 8-quarter high of $4.4 billion.

“The buzz around existing and new unicorns was back with mega-rounds jumping significantly.  As a result of these financings, the quarterly funding tally looked quite strong," stated Anand Sanwal, co-founder and CEO of CB Insights. "But Q2 also illustrated that deal activity has settled into a new, lower normal after declining through most of 2016 driven by weaker early stage activity. While we have seen a handful of larger acquisitions and IPOs in 2017, the exit environment's health will be a key driver of whether deal activity resumes.”

 

Key Q2 2017 highlights:

  • Fueling the US quarterly dollar spike were 31 mega-rounds of $100 million or more, the highest in the US since the peak of 36 in Q3 2015. Mega-round activity is up significantly from the 8-quarter low of 13 recorded in Q4 2016. Amid this activity, median later-stage deal size also jumped near the record highs of Q3 2015, rising 53% to $33 million.
  • 9 new VC-backed companies in the US reached valuations of $1 billion or more in Q2 2017, up from just 3 in Q1 2017 and also marking the highest quarterly total since the frothy days of Q3 2015. However, the new unicorn figure was still significantly below the 16 unicorns birthed in Q3 2015, as several of this quarter’s mega-rounds were deployed to well-capitalized existing unicorns.
  • Corporations and corporate VCs have remained active in the US even as overall deal activity has slowed, with corporates participating in 26% of all US deals in Q2’17.
  • US Digital Health financing saw a strong quarter, with deals rising 38% to 113 and total dollar funding jumping 63% to $2.7 billion. Both figures represent 8-quarter highs, and Digital Health companies saw 6 mega-rounds of $100 million or more during the quarter.
  • Regionally, funding in California increased 21% from the prior quarter, buoyed by a 27% rise in funding in Silicon Valley (South Bay Area) to $3.6 billion, an 8-quarter high. New York Metro funding jumped 81% from $1.5 billion to $2.8 billion.
  • Meanwhile, quarterly deal activity in San Francisco (North Bay Area) and New England slowed in Q2’17, while LA/Orange County deal activity rose 15% over Q1’17.
  • Global deal activity increased marginally from the previous quarter, but funding jumped  by 53% from $28 billion in Q1 2017 to $42.9 billion in Q2 2017, topping the figure seen in Q3 2015 for an 8-quarter high.
  • Mega-rounds als0 trended upward globally, as Asia also saw its highest quarterly mega-round total since Q3 2015 with 27 deals of $100 million or more.
  • Deals in Asia increased by 28% while quarterly funding spiked by a considerable 103%, driven by 5 massive deals of $1 billion or more accounting for over $10 billion in capital. Europe and Asia both hit 8-quarter dollar funding highs.

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

CB Insights research can be found online here.

 

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©2017 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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