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VC deals fall to under 1,000 in Q4, first time since 2011

Dollars invested dropped 16 percent in 2016, while the number of deals fell 20 percent

Financial trends and news by Steven Loeb
January 11, 2017 | Comments
Short URL: http://vator.tv/n/48c2

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When the market started to slow at the end of 2015, it was a fair bet that 2016 was going to tough year for companies looking to raise money, or at least it would be harder than it had been. That turned out to very true, as each quarter of the year saw fewer deals than the last.

In Q4, there were only 982 deals, the first quarter to see fewer than 1,000 since the fourth quarter of 2011, according to the MoneyTree Report from CB Insights and PricewaterhouseCoopers, released on Wednesday.

The number of deals was down 14 percent quarter-to-quarter, and down 18 percent year-to-year. 

The amount invested didn't fare much better, falling for the second quarter in a row to $11.7 million, down 16 percent from Q3 2016, and down 18 percent from the same quarter the year before. 

In total, there was $58.6 billion invested throughout the year, down 20 percent from the $73.3 billion in invested in 2015. The number of deals in 2016 was 4,520, a drop of 16 percent from the 5,406 deals the year before. 

Asia also saw a drop in both deals and dollars last year. The amount invested for the full year was $5.5 billion, down 25 percent from $7.3 billion in 2015, while there were only 337 deals, the third quarter in a row to see less than 400.

Europe, meanwhile, managed to escape the doldrums, seeing both deals and dollars go up. The continent saw $3 billion invested in Q4, a 22 percent increase, while deals hit 498, going up for the third quarter in a row.

Even with Europe's growth, globally things were down in Q4 and in the full year. 

In the fourth quarter, there were 1.971 deals, down 7.5 percent quarter-to-quarter, and 7.8 percent year-to-year. There was $21 billion invested, a drop of 12.5 percent from the previous quarter, and 25.5 percent from the same quarter the year before. 

Overall, there were 8,371 deals in 2016, down 9.5 percent from 9,255 the year before. The $100.8 billion invested was a drop of 23 percent from the $131.5 billion invested in 2015.

The top investors in Q4 in the U.S. were New Enterprise Associates, with 17 deals in companies like OpenDoor Labs and VidMe, followed by 500 Startups with 16. True Ventures, General Catalyst Partners and Khosla Ventures each invested in 13 companies.

The largest deal of the quarter was the $1.2 billion raised by OneWeb, followed by WeWork's $260 million and OpenDoor Labs' $210 million.

“2016 served as a nice reset to 2015's exuberant funding environment," Anand Sanwal, co-founder and CEO of CB Insights, said in a statement. "But for those who predicted 2016 would be the popping of the venture bubble, it was not. Yes, it was a tougher year in terms of deal activity and funding, but versus 2014, which we can call a more normal period, 2016 compares quite favorably."


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