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Venture capital investments topped $80B in 2017, first time in over a decade

The rise of unicorns have pushed down investments in seed companies, while late stage deals went up

Financial trends and news by Steven Loeb
January 8, 2018
Short URL: http://vator.tv/n/4aca

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2017 saw the continuation of a trend we've been seeing for a while now, with fewer companies raising more money, thanks, in part, to unicorns staying private longer than ever.

In fact, there was more venture capital deployed in 2017 than almost two decades, according the 4Q 2017 PitchBook-NVCA Venture Monitor.

With $84.24 billion invested, a 16 percent increase over the $72.41 billion in 2016, it was the first time since the dot-com era circa 2000 to 2001 that there was more than $80 billion invested in a single year. The 2017 total includes $24 billion in the fourth quarter, the third quarter in a row to top $20 billion. 

The number of deals, meanwhile, declined for the second year in a row, going from 8,635 to 8,076, a drop of 6.5 percent. That is also the lowest number of deals since 2012. In the fourth quarter there were 1,778 investments made in 1,772 companies. 

With the amount being invested going up and the number of deals going down, that means, of course, is that the median and average deal sizes went up. The average deal size in 2017 was 10.4 million, while the number was $8.4 million last year, a 24 percent increase. 

The continued rise of unicorns

A lot of these trends and numbers can be attributed to the continued rise of the unicorns, or companies that are valued at over $1 billion; these companies received roughly 22 percent of total VC dollars, while making up less than one percent of deal volume, with $19.2 billion invested in just 73 deals. 

With that large percent of funding, late stage deals went up 2 percent year-to-year, while angel/seed deals took the biggest hit, falling over 13 percent. Early stage deals stayed relatively the same, going down only 0.3 percent.

In 2017, late stage deals were a higher percent of all deals, 20.3 percent, than any time since 2012, while angel/seed deals fell to their lowest percent since the same year.

With later stage companies commanding more money and deals, it's not a surprise that exits were down for the third year in a row as well, for the lowest number since 2011. 

Only 769 companies exited in 2017, a drop of 10 percent year-to-year, but since there were 13 unicorn exits, such as the Blue Apron and Snap IPOs, exit value hasn't gone down. 

Venture fundraising

Finally, with more money being deployed, more money has to be raised.

There were 209 funds raised last year, for a total of $32 billion, making it the fourth year a now to see over $30 billion raised, and the fifth year in a row with over 200 funds.

That included the $3.3 billion raised by New Enterprise Associates, but did not include the $100 billion Vision Fund from SoftBank Group and Saudi Arabia’s sovereign-wealth fund, by far the largest fund ever raised, since it is not a traditional venture fund, though it is still injecting capital into the market. 

(Image source: japantimes.co.jp)