Investors Pressed Pause on Fundraising as They Pump Capital into World’s Most Promising Companies, Meanwhile PE Firms Provide Much Needed Liquidity for VC’s Sluggish Exit Market
SEATTLE, WA – Investment into venture-backed companies in 2017 is on track to match or exceed dollars deployed in 2016, and if this pace holds, full-year 2017 venture capital (VC) dollars invested could be the highest in the past decade, according to the 3Q 2017 PitchBook-NVCA Venture Monitor. Venture investors deployed $21.5 billion to more than 1,699 venture-backed companies during the third quarter, bringing 2017’s total investment to $61.4 billion deployed across 5,948 deals to date. Mega-deals completed in the third quarter, like WeWork’s $3 billion infusion of VC, helped inflate deal value and have become the new normal in VC where investors pump larger amounts of capital into fewer companies, especially in the later stages. In fact, deals that carried a valuation of $1 billion or more represented less than 1 percent of 2017 deal count, but nearly 22 percent of the aggregate deal value. Meanwhile, private equity firms are increasingly providing an alternative liquidity option for a tepid exit market, which is pacing for the lowest number of exits since 2010.
“We are witnessing an upward trend in the amount of capital deployed while the number of companies receiving investment continues to shrink. However, if you peel back the onion, you uncover the influence unicorns are having on market dynamics, with investments by non-traditional investors into these companies inflating the overall dollars invested and valuations,” said Bobby Franklin, President and CEO of NVCA. Read more