According to the PitchBook-NVCA Venture Monitor, 2017 was the year when the highest yearly amount of capital invested in the entrepreneurial ecosystem was made since the early 2000’s in the United States.
The report from the agency says that there were 8,076 deals involving 8,035 companies with a total amount of investment of $84 billion by the U.S. venture capital (VC) industry in 2017.
The fact that companies backed by VC have managed to remain private for longer periods and demanded larger size of deals which has driven the evolvement of VC industry over the past several years.
However, 2017 was also the year where the number of large deals was the lowest since 2012 even though more capital was used in higher valued companies with lower number of transactions. On the other hand, 2017 was also the year when its median and average deal sizes reached the highest in a decade.
$19.2 billion in capital was invested in Unicorns – which are firms that are valued at over $1 billion or more, which was the driving force behind this trend. This was also the highest ever since records are being kept. While comprising of just 0.9 per cent of the deal volume, these this group accounted for 22.8 percent of the total dollars invested through VC. Despite a three-year decline in exit counts, overall VC exit value remained flat.
“While the figures are comparable to the dot-com era, the VC ecosystem appears healthy and driven by different dynamics,” said John Gabbert, CEO and founder of PitchBook. “Exciting later-stage companies with strong consumer traction are commanding large rounds of financing. Meanwhile, there are game-changing core verticals like VR and AR, IoT, AI and Fintech generating massive investments; there will be winners and losers amongst these VC-backed companies but the technologies are here to stay and will truly change the game for companies and consumers.”
“The fourth quarter bookended a busy year for the entrepreneurial ecosystem, marked by the largest amount of capital deployed to VC-backed companies since the dot-com era and a number of policy developments that will have lasting impacts on the ecosystem in 2018 and beyond,” said Bobby Franklin, President and CEO of NVCA. “As we close the books on another banner year, 2017 will be remembered as a year of changing market dynamics for the industry, including large pools of committed capital, shifting deal sizes, rising valuations, record unicorn exits, and strong investment into life science companies and other emerging breakthrough technologies.”
There were 209 funding rounds with total funds of $32 billion raised in 2017 which marked another good year for fund raising.
Since the dot-com era of 2000-2001, the highest annual amount of capital of $84 billion was invested in 2017 by VC investors.
There were 769 VC backed exits noted in 2017 but it was the third consecutive year where exists dropped.
(Adapted from PRNewswire.com)