BY Fraser Tennant
US-based venture capital (VC)-backed companies raised close to $100bn across 5536 transactions in 2018 – the highest annual funding level since 2000 – according to PwC’s and CB Insight’s MoneyTree report published this week.
While deal activity in 2018 was at its lowest level since 2013, the report reveals that US companies still raised a record number of mega-rounds in 2018, with 184 $100m-plus funding rounds. In addition, there was a record number of new unicorns in 2018, as 53 US VC-backed companies saw their valuation rise to over $1bn.
“2018 was a phenomenal year for US venture capital, with $99.5bn invested, a record-breaking 55 unicorn births, 184 mega-rounds and funding levels at $119.6bn, their highest level since 2000,” said Tom Ciccolella, PwC’s US venture capital leader. “There certainly continues to be a healthy availability of funds and appetite for investment, while the trend of fewer, bigger deals persists.”
Key highlights in the Q4 MoneyTree report include: (i) US deals and funding slipped in Q4, dropping from a record funding level of $28bn across 1325 deals in Q3 2018 to $25bn across 1211 deals in Q4 2018; (ii) seed-stage activity rose slightly to 23 percent of all deals, although this was still well below levels from a year prior; (iii) expansion-stage deal activity was up slightly, at 24 percent of all deals, compared to 20 percent a year prior; and (iv) median deal sizes were up across the board, with later-stage median deal size rising to $37.5m in Q4 2018, up from $32.4m from the previous quarter.
Regionally, San Francisco, Silicon Valley, New York, New England and Los Angeles all saw increases in funding levels in 2018. In San Francisco, funding jumped 55 percent, rising to $28bn. In New England, funding activity increased for the second straight year, to $11bn. Silicon Valley and New York saw an uptick in funding in 2018, increasing to $18bn and $13bn, respectively. Funding for Los Angeles-area companies increased slightly to $6bn.
“While this year saw the lowest level of deals since 2013, median deal sizes are up and $100m plus mega-deals are becoming standard," said Anand Sanwal, chief executive co-founder of CB Insights. "US companies raised a record 184 mega-rounds, a 53 percent increase compared to last year's record. While mid- and late-stage start-ups are winners in the current environment, the early stage is getting pinched with seed activity. There does not appear to be a near-term catalyst to get seed activity growing again."
In terms of global VC funding, last year saw $207bn of VC funding raised globally across 14,247 transactions – a 10 percent increase in deal activity. Furthermore, 2018 came close to the funding record of 2000, a 21 percent jump compared to 2017.
Report: Q4 2018 MoneyTree Report