With $27.8 billion invested in Q3, 2018 has seen more VC funding than all of 2017

Steven Loeb · October 8, 2018 · Short URL: https://vator.tv/n/4c4c

2018 is currently on pace to see the most venture capital invested in the US in a single year

Venture capital is having a great year so far. In fact, it's so good that, at this pace, 2018 could hold the mark for most venture capital invested in the US in a single year.

That's according to the PitchBook-NVCA Venture Monitor, a report that is jointly produced by PitchBook and the National Venture Capital Association (NVCA). There was more than $27.8 billion invested in U.S. companies in Q3, putting the total yearly value at $84.3 billion, already higher than the $82.02 billion raised in all of 2017, with an entire quarter left to go.

That $27.8 billion is also a 15 percent increase from the same quarter in 2017.

At the same time, dealflow took a rather large hit quarter-to-quarter, falling 17.5 percent to 1,937. That is the first time the number of deals closed has fallen below 2,000 in a single quarter since the fourth quarter of 2012, nearly six years ago. 

Accordingly, with more money going into fewer deals, that means larger deal sizes, and that includes an increase in so-called mega-rounds, or those of at least $100 million. Angel and seed deals fell 24.5 percent from Q2 to just 785, the first time the number has dipped below 1,000 since Q4 '12, while early stage deals fell 14 percent to 686. Even late stage deals also fell 14 percent, to just 466, in Q3. 

Meanwhile, the number of mega-rounds increased 38.8 percent quarter-to-quarter, and investments into unicorns, or companies valued at at least $1 billion, made up nearly 23 percent of VC deal value, the highest ever percentage. 

“The overarching trend we’re seeing in private markets is ever-growing sources of capital facilitating larger VC rounds, driving investment totals higher across the VC environment,” said John Gabbert, founder and CEO of PitchBook, said in a statement.

“There is a question of whether greater competition among investors and the general capital availability is a good thing – as investors may run the risk of overlooking company fundamentals and inflating valuations."

Bigger funds means bigger deals

Part of the reason that deal sizes have increased, the report states, is because of the growth in fund sizes. As fund sizes grow, there is a greater opportunity, and desire, to invest larger amounts of capital. 

The median fund size in Q3 was $68 billion, a five year high. At the same time, the number of funds raised between $250 million and $500 million reached 27 in 2018, while 2017 saw 25 for the entire year. There have also been five funds so far of over $1 billion, whereas there were just three in 2017.

Of the 230 funds have closed in 2018 so far, over 40 percent were more than $100 million.

2018 is also on pace to be the fifth year in a row with over $30 billion in VC fund commitments. 

The most active investors

When it comes to the most active investors across angel/seed deals, far and away the biggest dealmaker is Plug and Play Tech Center, which made 23 investments. That is more than double the 11 deals from the second most active investor, Keiretsu Forum.

In addition, Keiretsu also tops the list for the most active early stage investor, with 26, followed by Alumni Ventures Group and Keiretsu Capital, each with 22.

The most active late stage investor is New Enterprise Associates, which made 17 investments, then Accel with 15 and Alumni Ventures Group, with 12.

(Image source: ekapija.com)

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