The number of $100M deals expected to fall 30% this year

Steven Loeb · May 16, 2016 · Short URL: https://vator.tv/n/4564

There will be 125 of them in 2016, still the second highest, by far, since 2010

It's hard out there for an entrprenuer right now, across every stage. In the early stage, for example, dollars fell 27 percent  to $548 million in March. That is the lowest amount of funding that early-stage companies in the U.S. have seen in at least the last two years.

It's no easier out there for later stage companies either, who are now finding it much harder to get those big rounds, according to data out from CB Insights

There have been 45 deals of at least $100 million so far this year, putting the year on pace to see 125 such deals. If that turns out to be right, that would be a 30 percent drop from the 183 such deals in 2015.

To be fair, 2015 seems to have been an outlier, growing 75 percent from the 104 deals of at least $100 million in 2014. It should also be noted that, before 2014, none of the preceding four years had come close to that number. The biggest number had been in 2011, which had seen 37 of these kinds of deals.

So, putting it in context, 125 deals of $100 million is still pretty extraordinary, and it would still be, by far, the second most in the past six years.

Interestingly, many of the big deals are now happening in Asia, rather than in the United States. They include Oyo Rooms,  an international sovereign fund, which raised $100 million in April;  e-commerce marketplace Tokopedia, which raised $147 million in April; and Zhaogang, which specializes in steel trading information services, and which raised $153 million in January.

Despite the number of $100 million deals still remaining high, the fact that is is expected to fall so far this year shows how things are slowing down, even for the companies that have proven themselves, and whp have been raising money for a while now.

"In the late stages there's a huge market slide. It's night and day between what the environment was six months ago and what it is now. The IPO is, effectively, closed. You're not seeing any tech companies go public, and it doesn't seem like it's going to open in the next month or two," Jules Maltz, Partner at IVP, which does late-stage investing, said in a recent panel at Vator Splash Spring. 

"There's still some greenshoots. There's still great companies fundamentally doing well, and growing their businesses, but just from a financing environment, valuation environment, opportunity for great companies to raise capital at cheap prices is just not out there. So what we're seeing is a lot of great companies are hunkering down, they're getting to profitability, or they're raising more debt. They're not out there raising more equity capital right now."

What is happening in the later stage also reflects the broader market trend. 

In the U.S., startups raised $14.8 billion according to the Q1 2016 Venture Pulse Report from CB Insights, an 18.6 percent decrease from the $18.2 million invested in the year ago quater. There were 1,035 deals in Q1; not only was that down over 17 percent year-to-year, its the lowest number of investments made since the first quarter of 2012. 

And, at the current rate, 2016’s figures might actually wind up being lower than 2011.

(Image source: socialbarrel.com)

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IVP (Institutional Venture Partners)

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With $7 billion of committed capital, IVP is one of the premier later-stage venture capital and growth equity firms in the United States.  Founded in 1980, IVP has invested in over 300 companies, 106 of which have gone public.  IVP is one of the top-performing firms in the industry and has a 36-year IRR of 43.2%.  IVP specializes in venture growth investments, industry rollups, founder liquidity transactions, and select public market investments.  IVP investments include such notable companies as AppDynamics (CSCO), Business Insider (Axel Springer), Buddy Media (CRM), Casper, Compass, Datalogix (ORCL), Domo, Dropbox, Dropcam (GOOG), Fleetmatics (FLTX), GitHub, HomeAway (AWAY), The Honest Company, Kayak (PCLN), Klarna, LegalZoom, LifeLock (LOCK), Marketo (MKTO), Mindbody (MB), MySQL (ORCL), Netflix (NFLX), Omniture (ADBE), Personal Capital, Pure Storage (PSTG), Slack, Snap (SNAP), SoFi, Supercell (SoftBank), Tanium, Twitter (TWTR), Yext (YEXT), ZipRecruiter, and Zynga (ZNGA).  For more information, visit www.ivp.com or follow IVP on Twitter: @ivp.

CB Insights

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Jules Maltz

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Jules Maltz is a General Partner at IVP and led IVP's investments in Buddy Media (CRM), Checkr, Dropbox, Indiegogo, NerdWallet, Oportun, RetailMeNot (SALE), Slack, SteelBrick, TuneIn, Zendesk (ZEN), and Zenefits