Joshua Mayers July 12, 2016
If you're looking for one resource to catch up on all things U.S. venture, you should check out our 2Q U.S. Venture Industry Report (it's free!).
If you're looking for the quick version, we've compiled highlights from the report below.
*One quick note, according to PitchBook methodology, Uber’s mammoth financings in the first half of 2016 were collated into one super round of $5.6 billion in 2Q.
Thanks to mega-rounds, 2Q saw a staggering $22.3 billion invested in total. Though there has been a clear deceleration in venture financings that we anticipate will plateau.
Winners take all: Since 2014, unicorns have been responsible for much of the surge in VC invested, with Uber’s billions in 1H the standout.
A flight to quality is still boosting the proportion of large financings (left, below), while a focus on maturer companies is evidenced by $25 million-plus financings accounting for over 66% of all capital invested in 1H (right).
The fact over $2 billion was invested across 990 rounds indicates that many angel & seed investors still have plenty of money on hand, they are just increasingly selective about where they put it.
Series A follow-ons did not increase in proportion to a surge in seeds, though recency should be taken into account and data for the past couple of years is most subject to change—though it's unlikely to change the trend.
Graph explainer: The seed-stage activity below is broken down by year, while the corresponding Series A follow-on data in orange includes all follow-on rounds for those companies regardless of year. For example, the roughly 400 Series A follow-on rounds for startups seeded in 2013 could have occurred anywhere from 2013 to 1H 2016.
Trepidation is evident as 2016 is well off pace to match the past several years both in count and value.
Investors are still bidding up quality opportunities, though late-stage round sizes could see their first annual drop in quite a while.
Even a half-year’s tally must be kept in perspective. This slowing was preceded by a prolonged stretch of considerable exiting.
Venture-backed exits in the U.S. remain scarce, although, similarly to dealmaking, what events are occurring have been relatively lucrative. The scarcity of 2016 IPOs should be noted (i.e. the data may be skewed somewhat).
Even amid a continually apprehensive landscape, investors went on to raise more money in a single quarter than ever before, collecting a mammoth $12.6 billion in 2Q.
Somewhat expectedly, there was a bump in 1H funds closed on $500 million or more. This year's vehicles of $50 million or less are making up the smallest proportion since 2008.
That $1 billion sum collected by first-time VCs speaks more to both proven individuals striking out on their own as well as LP willingness to gain exposure to the asset class.
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