3 Q 2018
2018 VC invested primed to top
$100 billion
Page 4
The definitive review of the US venture capital ecosystem
2018 has discredited rumors of
the death of technology IPOs
Page 25
Fundraising activity continues
hot streak, topping $30 billion
for fifth straight year
Page 28
In partnership with
Credits & Contact
PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Research & Analysis
Content
NIZAR TARHUNI Associate Director, Research
CAMERON STANFILL Analyst, VC
JOELLE SOSTHEIM Analyst, VC
ALEX FREDERICK Analyst, VC
BRYAN HANSON Senior Data Analyst
JORDAN BECK Data Analyst
CAROLINE SUTTIE Production Assistant
JENNIFER SAM Senior Graphic Designer
RESEARCH
reports@pitchbook.com
National Venture Capital Association
(NVCA)
BOBBY FRANKLIN President & CEO
MARYAM HAQUE Senior Vice President of Industry
Advancement
DEVIN MILLER Manager of Communications & Digital
Strategy
Contact NVCA
nvca.org
nvca@nvca.org
Silicon Valley Bank
GREG BECKER Chief Executive Officer
MICHAEL DESCHENEAUX President
JESSE HURLEY Head of Global Fund Banking
SHANE ANDERSON Senior Credit Officer
ANN KIM Director, Hardware and Frontier Tech

Contact Silicon Valley Bank
svb.com
venturemonitor@svb.com
Perkins Coie
FIONA BROPHY Partner, Emerging Companies &
Venture Capital
RAFEEDAH KEYS Senior Marketing Manager

Contact Perkins Coie
perkinscoie.com
startuppercolator.com

Solium
KEVIN SWAN VP Corporate Development
JEREMY WRIGHT Head of Private Markets
STEVE LIU Head of Solium Analytics
RYAN LOGUE Head of Business Development

Contact Solium
solium.com
Executive summary
3
Overview
4-6
Angel & seed
8
First financings
9
Early-stage VC
10
Late-stage VC
11
SVB: SVB’s view on the evolving PE market
12
Activity by region
13
Activity by sector
15
Life sciences
16
SVB: Venture debt in a booming tech market
17
Corporate VC
19-20
Perkins Coie: How PE plays into VC-backed exits
21-22
Growth equity
23
Solium: Liquid gold
24
Exits
25-26
SVB: How to spot Space 2.0 opportunities
27
Fundraising
28-29
League tables
30
Methodology
31
Contents
2
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Executive summary
3
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
The trend of high concentration of capital into fewer, larger investments has solidified into the status quo for the US VC ecosystem.
Perhaps nothing represents this new normal better than the number of $50 million+ deals closed in 2018 through 3Q, reaching 378
rounds and already surpassing the 292 closed in full-year 2017. Non-traditional VC investors and tech investors are primarily driving this
increase. At the same time, several traditional VCs have raised larger funds to compete in the mega-rounds with the SoftBanks of the
world, seeing larger amounts of capital as a competitive advantage and opportunity to invest in the best companies. A healthy fundraising
environment is also playing a part, as 2018 is on track for a fifth consecutive year of $30 billion+ closed by VC funds. To round out the
venture cycle, a healthier IPO market is providing much-needed returns to LPs and capital for reinvestment in VC.

This phenomenon hasn’t been limited to just the large late- and growth-stage deals—it’s been at every investment stage and across most
sectors. The result has been rising pre-money valuations, most notably for Series A financings, which have typically been less affected by
frothy funding markets, but are now experiencing an unusually dramatic increase in valuations.
With the recent metamorphosis of the industry, seed-stage financings are also witnessing a transformation since peaking in 2015. The
number of seed-stage investments has moderated, as the wave of new angel & seed investors that emerged earlier in the decade and
drove up activity for several years has reduced. A cohort of those seed firms has raised larger follow-on funds and more institutional
capital, while several firms died off or were not able to raise later funds. This shift has led to many seed deals being completed today at
levels that would have amounted to a Series A round just a few years ago.
Another ongoing shift in the venture industry is the attention to startups in non-coastal regions of the country. This trend hasn’t quite
surfaced in the data yet, but positive sentiment and interest are emerging. Part of the interest stems from the lower cost of startup
operations, the demand for follow-on investments in a strong cohort of startups looking for larger pools of capital, and a strong talent
pool. How quickly and pronounced this interest will translate in the investment data over the coming months remains to be seen, but
coastal and non-coastal investors are showing signs of optimism.
A closely watched trend that has unfolded, perhaps more slowly than some anticipated a year ago, has been the opening of the IPO
market for tech companies. Through three quarters in 2018, the number of venture-backed IPOs has already surpassed 2016 and 2017.
Some investors have described the tech IPO market as in a Goldilocks stage—not too hot and not too cold—making it a prime time for
companies to go public, especially as the public markets remain near all-time highs. Another positive signal for a healthy tech IPO window
has been the strength and quality of companies once they float. Meanwhile, the life sciences sector, where IPOs have been strong for a
number of years, continues its momentum.
Despite the welcome re-opening of the venture-backed IPO market, it is fair to say that it should in fact be much more robust. With
the public and private markets at or near all-time highs, the number of venture-backed IPOs hasn’t kept pace. The availability of late-
stage capital is certainly part of the reason, but there are also a number of policies and economic conditions that are restraining the IPO
market for VC-backed companies. NVCA and other organizations have continued to push for policy solutions to address the many issues
startups face when going public. These efforts led to the passage of the JOBS and Investor Confidence Act of 2018 in the US House of
Representatives in July by an overwhelming bipartisan vote of 406-4. The law, often dubbed “JOBS 3.0,” includes several provisions that
would encourage capital formation for US startups and seek to find solutions to some of the issues small capitalization companies face on
the public markets.
Another notable policy area from 3Q included the August passage of the Foreign Investment Risk Review Modernization Act (FIRRMA),
which will have significant effects on VCs with foreign LPs and startups with foreign co-investors. So far, the impact of the law has been
limited, with some sectors that were seeing high Chinese investment—such as autonomous vehicles—experiencing a slowdown from
foreign investors. There haven’t been large-scale changes yet, but once the new law begins to be implemented in the coming months,
expect a more significant impact on the US venture industry.
4
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
$37.1$27.1$31.3$44.7$41.5$47.6$71.3$81.7$76.4$82.0$84.34,720 4,474
5,399
6,752
7,871
9,272
10,544 10,661
9,087
9,259
6,583
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
0
500
1,000
1,500
2,000
2,500
3,000
$0
$5
$10
$15
$20
$25
$30
$35
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
Angel & seed
Early VC
Late VC
Overview
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
The US VC asset class saw another quarter
of strong activity as capital invested
trended toward a new high. 3Q capital
investment topped $27.9 billion, pushing
YTD 2018 deal value to $84.3 billion—a
record amount of capital raised with a
quarter remaining.
Regarding deal count, the early stage saw
a double-digit percentage decline this
quarter, but the slowdown was even more
pronounced for angel & seed deals, where
activity fell 26.5% from 2Q. Annually, deal
count currently stands 28.9% shy of the
2017 EOY total, putting 2018 on pace to be
about equal with last year.
As of 3Q, median VC deal sizes have
experienced double-digit percentage
growth over 2017. Early-stage deals have
seen the greatest increase, rising 25.0% to a
median deal size of $7 million. Median pre-
money valuations are also climbing across
stages. Series B deals saw the greatest
growth compared to 2017 at 37.5%.
The inflation of valuation figures can be
attributed in part to the trend of increasing
fund sizes, with investors now viewing large
capital reserves as a competitive advantage.
In some instances, investors have
reportedly pressured firms to accept an
investment by threatening to invest in rivals
instead. Seeking to compete with large
VCs and nontraditional investors, smaller
VCs may see capital efficiency put under
pressure with more expensive investments
and larger absolute returns necessary to
satisfy LPs.
2018 deal value has already reached a decade high
US VC deal activity
Deal value remains elevated
US VC deal activity by stage
5
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
2.5
3.0
3.6
3.7
5.0
5.3
6.6
7.0
8.8
8.4
0
1
2
3
4
5
6
7
8
9
10
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Angel & seed
Series A
Series B
Series C
Series D+
$6.3$2.4$2.6$13.6$16.9$18.5$17.4$19.26
7
9
27
24 23
71
79
55
73
80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
Nontraditional investors, such as hedge
funds, mutual funds and sovereign wealth
funds, made big moves in the first three
quarters of 2018, investing in a total of 1,347
deals, on pace to match 2017. Although
it’s difficult to ascertain capital invested by
a specific group, nontraditional investors
participated in deals totaling $50.3 billion over
the first three quarters of 2018, reaching a new
annual high. Tourist investor participation in
deals $50 million or greater increased 43.8%
YTD compared to 2017, as these investors
tend to back larger, more mature businesses.
These deep-pocketed investors are helping to
fuel the capital availability that is allowing firms
to stay private longer. We expect these firms
to continue playing an increasingly active role
within VC as companies continue to delay exits
and seek capital for further growth.
Average time to exit has climbed steadily
over the past decade, settling at 6.4
years in 2018. This is due in part to the
aforementioned rise in capital availability,
especially at the late stage. Median
company age has also risen in 2018 for
companies raising angel through Series
C rounds. Median age rose the most at
the angel & seed stage (up 22.8% in 2018
versus last year) in part because investor
composition is changing, and firms are
investing in more mature companies with
lower-risk profiles.
Another contributing factor is the rise of
unicorns and the increased frequency with
which those $1 billion+ valuation firms raise
additional capital. At 39 deals and $7.96
billion raised by unicorn firms in 3Q, 2018
is pacing for a new high on both fronts.
As the number of unicorns grows, so do
the growth of paper gains and unrealized
value held illiquid by investors. The unicorn
phenomenon has been fueled by the upsurge
in mega-rounds. These rounds of at least
$100 million are becoming increasingly
prevalent in venture deals. 2018 has already
reached new records in terms of mega-fund
deal count, a 38.8% increase over 2017 with
143 deals closed. Peloton, an at-home fitness
equipment manufacturer, raised the largest
deal in 3Q: $550.0 million at a $3.6 billion
Companies continue to delay raising capital
Median age (years) of companies by stage
Majority of capital flowing into $50M+ deals
US VC deals ($B) by size
Unicorns raise record capital in 2018
US unicorn deal activity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
6
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
4.9 5.0
7.1
4.8
7.6
6.8
0
1
2
3
4
5
6
7
8
9
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Acquisition
IPO
Buyout
0
50
100
150
200
250
300
350
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2011
2012
2013
2014
2015
2016
2017
2018
Acquisition
IPO
Buyout
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
pre-money valuation. Investors have not
been shy to invest in consumer businesses,
as consumer-focused companies captured
21.7% of the mega-deal capital in 3Q.
While companies are taking longer to find
the exit, the number of exits in 2018 is
expected to meet or exceed 2017 totals.
Capital exited is 13.0% shy of 2017 full-year
activity, with $20.8 billion exited in 3Q.
We expect capital exited to easily surpass
2017 by year end. This rise in capital exited
is due, in part, to a greater percentage of
companies being exited at larger sizes.
20.4% of exits were at least $100 million
versus 16.3% of companies for the entirety
of 2017. Median exit size sits at $100.0
million, and average exit has climbed to
$244.2 million, a 7.9% increase over 2017
entire year activity. Average post-money
valuation also continues to rise, currently
settling at $474.16 million, a 43.0% increase
on the post-money valuation two years
prior. Even though the number of exited
companies is flat, capital is being returned
to investors at compelling levels.
Fundraising, which has been operating at
elevated levels since 2014, has already
exceeded $30 billion in commitments for
the fifth consecutive year. 15 funds have
closed on at least $500 million, five of
which were over $1 billion. These larger
fundraises provide a level of flexibility
that allows for a longer fund lifecycle
if necessary. This enables investors to
commit to companies that may require
more patient capital to achieve optimal
financial outcomes. Investors are also
increasingly raising larger funds to support
existing portfolio companies. Lightspeed
Venture Partners raised the second largest
fund in 3Q, closing on $1.05 billion in
commitments with a focus on late-stage
VC follow-on rounds in existing Lightspeed
portfolio firms. Overall fund count has been
remarkably low, with only 57 US VC funds
closed in the third quarter. 2018 is pacing to
see the lowest fund count since 2014. The
trend playing out in fundraising mirrors the
overall asset class: Larger sums are being
raised across fewer vehicles, and elevated
levels of capital are available to startups.
Median time to exit slips across IPOs and buyouts
Median time to exit (years) by type
Buyouts are becoming an increasingly popular exit route
US VC exits (#) by type
7
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
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8
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
$0.9$0.6$0.5$0.8$0.9$1.1$1.3$0.9$1.6$1.1$1.4$1.6$1.3$1.4$2.1$1.7$2.1$2.1$2.1$1.9$1.7$1.7$1.7$1.6$1.7$1.8$2.0$1.8$2.0$2.1$1.60
200
400
600
800
1,000
1,200
1,400
1,600
$0
$0.5
$1.0
$1.5
$2.0
$2.5
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
Angel & seed
PitchBook-NVCA Venture Monitor
Angel & seed quarterly deal value slipped
slightly in 3Q, ending down from 2Q but within
range of a remarkably stable past 16 quarters
that have seen US capital investment hover
between $1.5 billion and $2.2 billion each
quarter. Capital invested slipped from $2.1
billion to $1.6 billion. Deal count, which was
already on a slow descent, tumbled from 1,005
to 785 deals closed, a 21.9% decline. The rise
in valuations and median deal sizes has been
tempered by a downturn in deal count. Despite
the dip in capital invested over the past quarter,
on an annual basis, 2018 remains on pace to
match or exceed activity in 2017. $5.7 billion
has been deployed over the first three quarters
of 2018, just 21.2% shy of the $7.2 billion
allocated last year.
Correlated with the phenomenon of dropping
deal counts and rising capital investment is
the ascent of deal sizes. The proportion of
$1 million+ rounds has grown over the past
six years and now makes up 56.1% of deals
by count. Accordingly, median deal size has
continued to climb upward. Median angel &
seed deal size has increased 19.4% over the
past year. Valuations of angel & seed deals also
enlarged 16.7% over 2017, far less than the
next biggest valuation increase, which is to say
that pre-money valuations are up significantly
across all venture stages. Surprisingly, angel
valuations have exceeded seed for the first
time since 2010. This suggests that angel
investors may be joining angel syndicates to
increase investment size, therefore taking
greater equity stakes. Another option is that
angel investors, typically entrepreneurs and
high-net-worth individuals, may be artificially
inflating pre-money valuation due to a lower
level of experience with investment valuation
compared to career VCs.
The slowdown in the angel & seed fund
ecosystem is due primarily to two factors.
First, angel & seed funds have institutionalized,
attracting larger investors and investments.
Second, many high-net-worth angels have
formed venture funds to invest in later stage
deals or have left angel & seed investing
entirely as competition has risen. Falling deal
counts notwithstanding, we expect capital
invested to grow as median deal sizes continue
to climb.
Deal sizes continue to grow
Median US angel & seed deal size ($M)
Angel & seed deal value slips in a trend reversal
US angel & seed deal activity
$0.5
$0.7
$1.7
$2.0
$0
$0.5
$1.0
$1.5
$2.0
$2.5
2010
2011
2012
2013
2014
2015
2016
2017 2018*
Angel
Seed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
9
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
First financings
$5.8$4.0$4.6$6.1$7.1$7.2$7.6$8.8$7.0$7.4$7.61,624
2,031
2,737
3,205
3,449
3,679
3,440
2,701
2,676
1,594
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
1,722
0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
First VC
Follow-on VC
$1.1
$1.4
$3.2
$5.4
$0
$1
$2
$3
$4
$5
$6
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Median
Average
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
First VC
Follow-on VC
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
2018 pacing for all-time high in capital raised
US first-financing VC deal activity
First-time deal count expected to fall in
2018
US first-financing VC rounds versus follow-on VC rounds (#)
Median deal size trends upward
Median and average US VC first-financing size ($M)
Capital raised climbs in proportion to
follow-on funding
US first-financing VC rounds versus follow-on VC rounds ($B)
10
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Early-stage VC
$4.7$5.1$4.9$5.6$4.8$7.2$6.3$6.4$5.9$6.3$6.2$5.1$5.7$6.8$7.0$9.5$9.0$9.8$8.90
100
200
300
400
500
600
700
800
900
$0
$2
$4
$6
$8
$10
$12
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$25M+
$10M-
$25M
$5M-
$10M
$1M-
$5M
$500K-
$1M
Under
$500K
$5.6
$7.0
$0
$2
$4
$6
$8
$10
$12
$14
20082009201020112012201320142015201620172018*PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
After a record-setting previous three
quarters, 3Q provided strong yet curtailed
deal value. 3Q saw $8.9 billion invested
into early-stage firms with median deal size
swelling 25.0% to a record $7.0 million.
Two of the four largest deals of the quarter
were in autonomous vehicle software firms.
Zoox raised the most capital in a single early-
stage round this quarter by closing on $500
million, and Pony.ai raised $102 million. Biotech
firms comprised the other two greatest early-
stage deals, with Gossamer Bio and Compass
Therapeutics raising a combined $362 million.
Massive deal sizes continue to become more
prevalent across rounds. In 3Q, 59.0% of
early-stage capital flowed into $25 million+
deals, and 94.5% of capital flowed into $10
million+ deals. Median early-stage deal size
has increased 100.8% since 2014, compared
to a 33.3% increase for late-stage. Unlike the
VC industry as a whole, early-stage deal count
has been keeping pace with capital invested.
686 deals were closed in 3Q, placing 2018 on
pace to exceed 2017. We attribute this strong
activity to an increase in non-traditional
investors, such as tourist investors and
angels. The rise of mega-funds may also be
encouraging investors with smaller funds to
move earlier in the cycle.
Looking closer at VC verticals, emerging
tech captured significant capital at the early
stages. AI & machine learning companies
attracted an impressive 92 early-stage
rounds of capital in 3Q. In terms of capital
raised, this vertical attracted $1.68 billion,
up 42.4% from one quarter alone. One such
company, Atrium, raised $64.5 million to
utilize machine learning to provide legal
services to startups. Life sciences firms
drew fewer yet larger early-stage deals
than AI, attracting 109 deals and $2.5 billion
in aggregate. Despite impressive activity,
capital raised in this vertical is down from
a peak of $3.4 billion raised in 1Q 2018.
Mammoth Biosciences stood out for closing
on two investment rounds this quarter (three
in 2018 total), raising over $30 million from
investors to develop a disease detection
platform that uses CRISPR technology.
Early-stage investment dips slightly in 3Q
US early-stage VC deal activity
Companies raising more earlier
US early-stage VC deals (#) by size
Median early-stage VC deal size continues to rise
Median US early-stage deal size ($M)
$9.6$6.7$7.2$5.0$5.8$6.5$6.3$5.9$6.2$6.7$7.1$6.8$9.3$13.5$9.2$12.2$13.2$11.3$14.1$10.0$12.1$15.5$10.2$8.3$8.8$12.6$15.2$9.2$17.8$15.7$17.40
100
200
300
400
500
600
700
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal value ($B)
# of deals closed
11
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Late-stage VC
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
Late-stage venture financings recorded a
third consecutive quarter of double-digit,
billion-dollar deal value, coming in at $17.4
billion across 466 deals. The late stage
has drawn increasing investor interest, as
these deals moved to nearly 24% of VC deal
count, the highest proportion since 2011.
Interestingly, while the pervading trend in
the industry since 2015 has been a smaller
number of VC deals, 2018 data has shown
increasingly robust deal counts in the
late stage, with 1,506 deals YTD in 2018,
representing 12.0% YoY growth.
While it is important to mention that late-
stage deals didn’t experience the steeper
deal count decrease we saw with angel
& seed, the uptick in late-stage volume is
another positive signal for the ability of
companies to progress through the VC
market. Third-quarter data shows sustained
activity rather than an extension of this
current uptrend in deal counts; however, this
count will expand as we continue to collect
new deals over time.
The overall increase in late-stage activity has
been a boon for mega-deals. Startups closed
51 deals larger than $100 million in 3Q 2018,
representing $10.96 billion in value and over
63.9% of total late-stage capital invested. To
be sure, the disproportionately small number
of deals driving this much of total VC deal
value at this stage bears consideration. With
elevated levels of available capital, companies
have more financing choices both inside
and outside of traditional VC as they reach
scale—a welcome development for growing
startups. On the other hand, mega-deals
can concentrate risk in fewer companies,
and rampant capital availability enables
overcapitalization and potentially reckless
spending by companies in pursuit of growth.
Dealmaking remains elevated in 3Q
US late-stage VC deal activity
Late-stage market increasingly supporting larger companies
US late-stage VC deals (#) by size
0%
20%
40%
60%
80%
100%
2012201320142015201620172018*Under $1M
$1M-$5M
$5M-$10M
$10M-$25M
$25M-$50M $50M+
12
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Silicon Valley Bank is well-known for its role in
the venture ecosystem. Can you describe how
SVB also works with PE firms?
We are in the business of financing innovation.
This approach extends to our investor partners,
and 20 years ago we pioneered creative
financing solutions for our venture firm clients.
Because of this experience, SVB has also
developed unparalleled expertise in lending to
and banking PE firms. Today, our Global Fund
Banking business works with more than 1,900
venture firms and 700 PE firms globally.
SVB’s deep industry experience and nimble
approach to fund lending help firms address
their financing needs. Our tailored liquidity and
fund-level debt solutions include subscription/
capital call facilities, fund-guaranteed loans to
portfolio companies, and NAV-based facilities.
For example, our Fund Banking team may
provide financing to a fund’s portfolio company
that perhaps a more traditional bank would not
be comfortable offering. The unsecured note
is often lent to a holding company housing the
fund’s investment in the portfolio company,
and the note is guaranteed by the fund. This
fund guarantee allows SVB more flexibility in
underwriting. As the company scales, it could
look to refinance the guaranteed debt, removing
the guarantee from the fund.
We know there is a lot of dry powder with more
firms chasing deals. How is this impacting PE?
As of December 31, 2017, US PE dry powder
was at $493.6 billion—that’s an incredible
amount. Globally, firms continue to raise
larger funds, enabled by the robust business
environment and an unprecedented pace of
deployed capital flowing to larger deals. Also,
LPs are flush with distributions from older
vintages, with 752 PE–backed exits through
September 2018. With the bull stock market
of the past decade, LPs must increase capital
allocated to PE to maintain internal PE target
allocations. We’ve also seen strong returns in
PE over the past five years, and GPs are not paid
to try to time the market; so given the sheer
amount of dry powder, there is a need to keep
deploying capital, even if some think valuations
are frothy. As a result, PE deal multiples are
reaching historic highs.
We are also seeing PE firms deploy new
strategies, including credit options to augment
existing growth, buyout and real estate funds.
Given these firms’ robust deal-sourcing methods,
they often find opportunities that may not fit
their equity strategy but would be a good match
for a debt investment. In other cases, they may
supply credit exclusively to their existing portfolio
companies in need. In both scenarios, PE funds
are seeking to capture the value internally instead
of sending it to a third-party debt fund.
Some of the larger PE firms are carving off
smaller pieces of their growth funds to focus on
seed or Series A deals. This strategy helps deal
sourcing and identifies potential investment
opportunities. As those younger companies
mature, the PE fund may have a good vantage
point from which to consider making a later
investment from its larger growth fund. With
such rich valuations in growth and middle-
market companies, funds are chasing better
returns and investing in earlier stages.
Looking ahead at the next 12-18 months, how
do you see PE evolving?
Short term, I don’t see the supply/demand
equation of capital versus opportunities changing
meaningfully anytime soon, so deal multiples will
likely remain high. Even if we see an economic
downturn or a material ramp in interest rates
constraining borrowing capacity, there still will be
historic amounts of dry powder (both direct and
secondary) to fuel liquidity options.
Stating the obvious, it’s definitely time to be
harvesting; many firms already have. With fresh
allocations from LPs on the horizon, I expect
fundraising to continue unabated in 1H 2019.
Another trend we are monitoring is what I would
call the blending of capital sources in PE and
venture investing. PE and hedge funds continue
to show more interest in venture and growth-
type deals, as their deal flow remains limited and
hyper-competitive. I’ve spoken with multiple
Series A venture firms that say they now view
PE as a top potential liquidity option for their
portfolio companies. In general, it is a phenomenal
time to be an entrepreneur and a founder.
With such fierce competition for deals, what
other nontraditional strategies are PE firms
considering?
We have seen platform models being deployed
with more regularity, a strategy in which
firms are aiming to buy small companies at
low multiples, build in a fragmented market
and then sell the larger company at higher
multiples. Other interesting trends we’ve
seen lately include hardware-as-a-service,
alternative-financing/fintech companies and
their warehouse needs, and home-as-a-service.
We’ve seen PE firms targeting the fragmented
home-service market to roll up multiple
companies and take on a market. As a dad of two
young kids, this market particularly resonates
with me: I go home at night and struggle to find
time to cook or mow my lawn or clean the house
or work on my HVAC system. So consumers
may be willing to pay nearly whatever it takes to
get these kinds of recurring services, which can
carry attractive margins.
Q&A: SVB’s view on the evolving PE market
By Jesse Hurley, Head of Global Fund Banking, Silicon Valley Bank
Smaller markets have been proportionally
resilient
US VC deals by region (3Q 2018)
Traditional hubs still account for preponderance of activity
US VC deals by region (3Q 2018)
PitchBook-NVCA Venture Monitor
VC activity is starting to move away from
traditional hubs
Select US MSAs as a proportion (#) of total VC
West Coast
38.3% of 3Q deals
54.7% of 3Q deal value
Mountain
6.8% of 3Q deals
3.2% of 3Q deal value
Midwest
1.7% of 3Q deals
0.7% of 3Q deal value
South
6.0% of 3Q deals
1.9% of 3Q deal value
Great Lakes
9.7% of 3Q deals
4.8% of 3Q deal value
Southeast
7.3% of 3Q deals
2.6% of 3Q deal value
Mid-Atlantic
20.4% of 3Q deals
20.1% of 3Q deal value
New England
10.0% of 3Q deals
11.9% of 3Q deal value
6.5%
6.2%
7.2%
5.2%
12.5%
9.5%
17.5%
14.7%
5.6%
4.1%
0%
5%
10%
15%
20%
25%
2014
2015
2016
2017
2018*
Boston
Los Angeles
New York
San Francisco
San Jose
Region
Deal count
Deal value ($M)
Great Lakes
187
$1,347
Mid-Atlantic
393
$5,606
Midwest
33
$195
Mountain
131
$903
New England
193
$3,322
South
115
$530
Southeast
140
$711
West Coast
739
$15,230
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
13
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Activity by region
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15
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Activity by sector
0
2,000
4,000
6,000
8,000
10,000
12,000
20082009201020112012201320142015201620172018*Commercial
services
Consumer goods
& recreation
Energy
HC devices &
supplies
HC services &
systems
IT hardware
Media
Other
Pharma & biotech
Software
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
20082009201020112012201320142015201620172018*Commercial
services
Consumer goods
& recreation
Energy
HC devices &
supplies
HC services &
systems
IT hardware
Media
Other
Pharma & biotech
Software
1,670 1,449 1,869 2,625 3,226 3,862 4,504 4,266 3,698 3,668 2,735 0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
20082009201020112012201320142015201620172018*# of software deals closed
Software as % of total VC
$10.0$7.3$8.3$15.3$13.6$16.3$31.3$32.4$37.0$31.0$35.80%
10%
20%
30%
40%
50%
60%
$0
$5
$10
$15
$20
$25
$30
$35
$40
20082009201020112012201320142015201620172018*Software deal value
Software as % of total VC
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
Software evens out, as pharma & biotech
grows most
US VC deals (#) by sector
Maturing software companies continue to
drive VC deal flow
US software deals (#) as proportion of total VC
Pharma & biotech sets annual record high
of $14B+
US VC deals ($B) by sector
Relative activity evens out
US software deals ($B) as proportion of total VC
16
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Life sciences
13.5%
15.0%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-$50M
$10M-
$25M
$5M-
$10M
$1M-$5M
Under
$1M
0
200
400
600
800
1,000
1,200
1,400
20082009201020112012201320142015201620172018*Pharma & biotech
HC devices & supplies
$9.3$7.9$7.8$8.7$8.6$9.9$12.3$14.9$12.5$16.7$19.10
200
400
600
800
1,000
1,200
1,400
$0
$5
$10
$15
$20
$25
20082009201020112012201320142015201620172018*Deal value ($B)
# of deals closed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
Venture inflation underpins life sciences’ surge
US VC life sciences deal activity
Proportionate activity continues to climb
US life sciences deals (#) as proportion of total VC
Life sciences pacing for another strong year
US VC life sciences deals (#) by sector
VCs gravitate toward larger deals
US VC life sciences deals (#) by size
17
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Venture debt in a booming tech market
By Shane Anderson, Senior Credit Officer, Silicon Valley Bank
Driven by increasingly larger deals, VC
investment in 2018 is on pace to hit a decade-
high level. In the first nine months of the year,
the median size of US deals grew an impressive
23.8% over 2017. In the first three quarters of
2018, the number of $100 million+ financings
increased 90.7% over the same period in 2017.
But the total number of deals has declined,
continuing the trend of more money chasing
bigger transactions.
What role does venture debt play in this
capital-rich environment? Consider that as
round sizes drive up corresponding valuations,
the pace of innovation and potential for global
impact require even greater investment. For
example, frontier tech—including robotics,
autonomous vehicles, space and artificial
intelligence—agtech and fintech are at a key
inflection point, addressing monumental
challenges and seeking global audiences.
The cost of deploying these innovations in
quickly evolving and massive marketplaces,
with increased competition and growing
regulations, drives companies to seek
additional capital at pivotal times in their
growth cycle.
Innovation requires immense capital

Over the years, Silicon Valley Bank has
observed how scaling venture-backed
companies use venture debt in boom times and
downturns. Today, venture debt remains an
important part of the fundraising cycle. A quick
primer: Venture debt works best in tandem
with a complementary equity capital raise. A
significant benefit of venture debt is that it
can provide an extension of runway, allowing
companies to demonstrate to investors that
they are making additional progress toward
critical milestones ahead of the next round.
Sometimes, if that runway gets a company to
cash flow-positive operations, an additional
round becomes unnecessary. We find that
emerging growth companies are attracted
to venture debt as a means of lowering the
total cost of capital in an attempt to avoid the
dilution that comes with an equity raise. Most
venture debt structures include only a fraction
of dilution compared with an equity event—a
plus for management and employees.
The basic points of venture debt
Venture debt is intended to provide three to
nine months of additional capital to support
investing activities for whatever pivotal
functions are needed to achieve milestones. It
could be used to hire or bolster a sales team,
improve marketing, invest in research and
development or buy capital equipment to
get to commercialization and begin scaling.
Typically, the amount of venture debt is set to
20% to 35% of the most recent equity round.
The amount of the debt is based on multiple
factors, including company growth rates, the
investor syndicate, sector, customer niche
and other potential capitalization risks. SVB
has observed that venture debt–to–valuation
ratio, a common metric for evaluating debt
worthiness, hovers consistently between 6%
and 8% of the company’s last post-money
valuation. This ratio is not set in stone but is the
average level that we are seeing across various
company stages, business models and sectors.
Often, the cost of venture debt is small relative
to additional runway acquired. There will
typically be a draw period, which provides a
window during which the company doesn’t
need to take the debt down immediately. The
current cost of debt is typically around a 6%
IRR (and may include an option to defer interest
to the loan’s maturity, thus preserving more
cash). Warrants—typically expressed as warrant
coverage or fully diluted ownership—also must
be factored into the cost. It isn’t uncommon to
see draw availability or the interest-only period
tied to milestones that align with investor
expectations of when the next equity round may
be raised. Sometimes, venture debt is not drawn
at all, serving more as insurance for a rainy
day, and it is commonly repaid with the next
fundraising event—having done its intended job
of extending runway to the next round.
Debt versus equity example
Say a company raises $10 million at a $50
million valuation, the equivalent of 20% of
the company. The company still needs an
additional $2 million to achieve key milestones
and increase its prospective valuation ahead
of raising the next round of capital. Comparing
venture debt versus equity, the company
can either take an additional $2 million from
investors at the same valuation, giving up an
additional 4% of ownership, or get $2 million in
venture debt at 25 basis points, or one-quarter
of 1% of ownership.
Timing venture debt
Raising debt when a company is flush with
cash may seem counterintuitive, but in many
cases, the debt can be structured with an
extended draw period so that the loan need
not be funded right away. Regardless of when
a company may want to fund the loan, typically
creditworthiness and bargaining leverage
are highest immediately after closing on new
equity.
Innovation takes ingenuity and sizable capital.
Even in a time of abundant cash, venture debt
is an attractive financing option for growing
venture-backed companies seeking to extend
runway, lower their cost of capital and keep
innovation thriving.
©2018 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. SVB, SVB FINANCIAL GROUP,
SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license.
For 35 years, Silicon Valley Bank has been at the intersection of innovation
and capital. We provide unique access to insights and strategies for
companies of all sizes, in innovation centers around the world. All designed
to help you find what’s next.
svb.com
The insights you need
to discover what’s next.
19
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Corporate VC
44.2%
46.7%
15.2% 16.6%
0%
10%
20%
30%
40%
50%
60%
20082009201020112012201320142015201620172018*% of VC deal value
% of VC deal count
224
162
682
514
497
420
0
100
200
300
400
500
600
700
800
20082009201020112012201320142015201620172018*Angel & seed
Early VC
Late VC
$9.9$6.4$8.0$13.1$12.0$15.2$26.9$36.8$36.7$36.3$39.3686
484
573
727
850
1,089
1,351
1,481
1,416
1,403
1,096
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
CVC continues to make up a larger share
of overall investment
US deals with CVC participation as a proportion of total VC
CVC deal count pacing to match 2017
US VC deals (#) with CVC participation by stage
Corporate investment has continued to
skyrocket in the third quarter of 2018.
CVC participation in venture deals has
already surpassed 2017’s annual totals,
with corporates participating in $39.3
billion worth of venture financings. Over the
last five years, corporate investment has
more than doubled from the $15.2 billion
invested in 2013. While deal count in the
third quarter trended downward year over
year, the number of deals closed with CVC
participation is still on pace to surpass 1,400
in 2018 for the fourth year in a row. Notably,
deals with participation from corporate
investors make up 46.7% of overall VC, a high
point compared to just 32.0% five years ago.
This historically high investment activity and
these larger deal sizes may relate to the greater
capital availability from corporate tax cuts
and capital repatriation, as well as strategic
initiatives to fund innovative technologies.
Corporate investment has become increasingly
concentrated in larger late-stage rounds.
Where deals $25 million or larger accounted
for 22.4% and 24.8% of activity in 2016 and
2017, respectively, that proportion has risen
to 34.5% this year. Strategic investments and
partnerships continue to be a ripe avenue for
corporate growth, potential new business lines
and technological improvements. While CVC
investments provide insight into potential
acquisition targets, they also illustrate larger
industry movements toward tech-based
products and services.
Software and biotech continue to dominate
CVC activity, especially among the quarter’s
largest deals. Late-stage companies integrating
emerging technologies such as artificial
intelligence into existing industries, particularly
2018 CVC participation surpasses last year’s total
US deal activity with CVC participation
20
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
0
200
400
600
800
1,000
1,200
1,400
1,600
20082009201020112012201320142015201620172018*Commercial
services
Consumer foods
& recreation
Energy
HC devices &
supplies
HC services &
systems
IT hardware
Media
Other
Pharma & biotech
Software
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
20082009201020112012201320142015201620172018*Commercial
services
Consumer goods
& recreation
Energy
HC devices &
supplies
HC services &
systems
IT hardware
Media
Other
Pharma & biotech
Software
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
CVC participating in more $25M+ deals
US VC deals (#) with CVC participation by size
automobiles, continue to be popular with
strategic investors. Toyota Motors led two of
the quarter’s largest deals, making a $500.0
million investment and strategic partnership
with Uber, as well as co-investing with
SoftBank in Getaround’s $300.0 million Series
D. Toyota’s partnership with Uber made public
its intent to deploy a fleet of mass-produced,
self-driving cars on Uber’s network. We’ve
asserted previously that Uber would be wise
to divest its autonomous vehicle unit due to
its slow technological progress in comparison
to competitors and the considerable costs
of adding and maintaining physical assets
in mass. With Toyota’s responsibility for the
fleet, however, Uber may overcome the latter
issue of fleet maintenance. The partnership
also marks Toyota’s notable advances into
autonomous vehicles, ridesharing and larger
market growth.
Incumbents in the financial services sector
are also tapping startups to update legacy
technical infrastructure and consolidate
operating processes via blockchain technology.
The third quarter saw a $32.0 million
investment by JP Morgan, Citigroup, Wells
Fargo, Fintech Collective and other notable
VCs into Axoni, an enterprise blockchain
solution provider for capital market operations.
Axoni focuses its services on enterprise
software for post-trade processing (clearing &
settlement), as well as workflow automation
of back-office operations. With many banks
well-aware of the technical debt they incur by
failing to update and innovate their internal
technology, this investment signals exploration
and perhaps willingness by industry leaders to
migrate to blockchain infrastructure.
Largest financings dominate capital invested
US VC deals ($) with CVC participation by size
Software a popular avenue for innovation
US VC deals (#) with CVC participation by sector
Biotechs secure outsized rounds
US VC deals ($B) with CVC participation by sector
21
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
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Q&A: How PE plays into VC-backed exits
By Fiona Brophy, Partner and ECVC Co-Chair, Perkins Coie
How has the mix of acquirers changed
for VC-backed companies? Specifically,
are you seeing more PE firms buying VC-
backed companies than before? If so, what
do you think is driving that?
Over the last several years, we’ve seen PE
buyers showing up in more deals involving
VC-backed tech companies. Those PE firms
that were early in pursuing VC-backed tech
firms have been very successful. A good
example is Vista Equity Partners, which has
seen very strong returns investing in and
acquiring enterprise software companies,
many of which are VC-backed. PE firms have
lots of capital to deploy and are finding good
opportunities in more mature VC-backed
startups that have solid revenues but still
room to create additional value. These
targets align well with the PE model. As
a result, we are seeing PE buyers in more
deals and filling the gap created by the
dip in strategic acquisitions over the last
several years. While it is not totally clear
why strategic acquisitions have been down,
some point to weariness of strategic buyers
over the high valuations being placed on
VC-backed startups in recent years. Many
of these late-stage VC-backed companies
raised multiple series of venture money
at robust valuations—and when it comes
time to exit, they are finding that their
expectations on valuation don’t align with
strategic buyers. In some cases, we are
seeing PE firms, that have record amounts
of capital to deploy, outbid strategic buyers.
This is particularly true in enterprise
software where late-stage VC-backed
companies have solid recurring revenue. In
certain industries where there are multiple
VC-backed companies with complementary
product offerings, PE firms can roll up
several companies, sometimes leveraging
an existing portfolio company to serve as
the buyer. PE buyers are offering boards
of VC-backed companies an additional
option to explore when they consider a sale
transaction, and many boards are proving to
be receptive to that.
How do founders and VC firms view the
difference between exiting via PE buyout
and corporate acquisitions?
In my experience, many startup founders
and their VC backers still believe exiting to
a strategic buyer (as opposed to a PE buyer)
is the best way to maximize deal value. That
may change over time, especially as we see
PE firms come in with the highest offer and
as founders who have had good experiences
selling to PE firms evangelize about those
experiences. Although some PE firms have
done a very good job of offering terms that
are competitive with strategic investors,
PE deals have a reputation of being more
complicated structurally, carrying more deal
risk and being less attractive on retention
incentives, particularly for employees. In
terms of structure, strategic acquisitions
tend to be straightforward. PE deals, on the
other hand, often involve more complicated
structures, including earnouts that can be
based on a myriad of milestones, multiple
layers of debt financing, management
rollovers of equity, the use of management
fees, etc. Right or wrong, there is also a
concern among the venture community
that PE deals have a higher risk of value
renegotiation after signing a LOI.
One area, however, where PE deals are
often less complicated, is their utilization of
representations and warranties insurance
(RWI)—a trend we haven’t seen as much
on the strategic side. In competitive PE
deals with RWI, we are increasingly seeing
no-recourse transactions, or transactions in
which the sellers’ indemnity is capped at all
or a portion of the retention amount under
the RWI policy (which now typically is 1% of
enterprise value). The cost of RWI has come
down dramatically, making it a practical
solution to an impasse over risk allocation.
RWI has real benefits for both buyers
and sellers, beyond the obvious benefit
of limiting sellers’ risk of a post-closing
reduction in deal value. It can reduce deal
friction and protracted negotiations over
two of the most contentious terms in any
deal—the scope of the representations and
warranties and the indemnity provisions.
This allows buyers to preserve goodwill and
positive relationships with the founders
(which helps with retention) and VC board
members (who may bring future deal
flow). Reducing tension over protracted
22
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
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PerkinsCoie.com/AI
negotiations is not only good for preserving
relationships, but also reducing overall
deal transaction costs which can offset
the cost of the RWI. PE deals can also be
attractive because PE buyers often show
more flexibility around deal terms and
structures and the ability to move nimbly to
satisfy a seller’s concerns. Strategic buyers
often have more fidelity to their historical
practice and way of doing things.

What is your outlook for VC-backed
companies acquiring other VC-backed
companies given the gigantic rounds that
have been raised recently?
We’ve seen more and more of these deals.
Given the increase in size of late-stage
fundraising rounds, VC-backed companies
can stay private longer and have plenty
of excess cash to deploy when they find
an attractive target. Deal values of these
acquisitions are often not reported, and
while historically these deals have been
on the smaller side, there have been some
large acquisitions, particularly in areas
where the target provides an expansion into
a new product line or service. With lots of
cash at their disposal, it makes sense that
these well-endowed companies will “buy it”
rather than “build it,” particularly when the
first mover will get the advantage.
Which sectors or industry verticals are you
keeping your eye on? Why?
I am keeping tabs on artificial intelligence
and machine learning. I think we are just
barely scratching the surface of how these
new technologies will affect us. And I
suspect we will see transformation on the
scale of what we saw with the internet
revolution when literally all aspects of
our lives—how we work, communicate,
educate our children, purchase goods and
services and even get dates—went through
a fundamental shift. It’s also an area where
the legal and ethical questions to be
addressed are interesting and thorny.
Average time to exit has ticked downward
in 2018; how are founders viewing the
timeframe between first financing and
eventual liquidity?
I think most founders start companies
to build amazing products and robust
businesses and expect to be in it for the
long run. However, founders have told me
that while building an awesome product
is hard, what keeps them up at night is the
transition from building the product to
implementing a go-to-market and sales
strategy. Many founders are engineers, so
tackling the technical challenges of building
great products is organic and within their
comfort zone. However, as these companies
mature and go to market, the founders must
pivot their skill set to create a sales vision
for the company, build out and motivate
a sales team, and close deals. At the same
time, these companies are often raising
their next round, which can be harder to
secure as late-stage VCs are expecting
to see sales traction. Exit by acquisition
can become very attractive at this stage
because strategic buyers offer not only the
prospect of liquidity, but also the ability to
leverage their existing sales and marketing
channels—and the more robust resources
and talent that come along with those
channels—to get a target’s product to
market. PE firms can make a similar pitch if
they leverage an existing portfolio company
and offer a seasoned management team to
navigate getting a product to market.
23
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Growth equity
$19.4$11.1$18.0$23.5$21.7$21.8$39.4$44.5$39.4$42.7$47.2571
389
540
624
647
657
879
960
826
900
785
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal value ($B)
# of deals closed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
Growth deal value pushes to new high
US growth equity deal activity
Growth equity deal value continues to
climb, following the broader VC market’s
trend toward large investments. In 3Q,
growth investors participated in 207 deals
corresponding to $15.6 billion in deal value.
The growth and maturation of the VC market
over the last few years in supporting larger
and more developed companies has facilitated
further participation from growth investors.
In addition to large VC deals, there were
two solely PE-growth rounds that topped
$1 billion in 3Q: WndrCo and JUUL Labs.
WndrCo is a consumer media holding
company focused on a streaming service
that provides short- to mid-form high-quality
content, currently dubbed “New TV.” The $1
billion raised by WndrCo, combined with $1
billion raised earlier in the year by New TV,
has almost solely driven the significant uptick
in media investment from growth equity.
WndrCo has undoubtedly been successful
in raising capital, but major execution risk
remains since it hasn’t yet announced any
shows.
The largest 3Q deal was e-cigarette maker
JUUL Labs, which raised $1.2 billion from
Fidelity and Tiger Global. JUUL plans to use the
capital to expand internationally on the heels of
its extreme popularity in the US, which enabled
this outsized funding round and a $15 billion
valuation. The company will likely continue to
face regulatory scrutiny based on its industry
of operation, but the recurring nature of the
business model combined with the current
growth rate make it an attractive target for
PE investors. Following the completion of the
round, in an effort to curb e-cigarette use by
teenagers, the FDA commissioner said he is
considering pulling all flavored e-cigarettes off
the US market, which would have a seriously
material impact on JUUL’s business.
Deals over $100 million make up more than
60% of deal value
US growth equity deals ($) by size
Maturing private businesses have led to larger
deals
US growth equity deals (#) by size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$200M+
$100M-
$200M
$75M-
$100M
$50M-
$75M
$30M-
$50M
$15M-
$30M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$200M+
$100M-
$200M
$75M-
$100M
$50M-
$75M
$30M-
$50M
$15M-
$30M
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
24
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Employee stock options and shares can
attract, retain and reward the talent you
need to grow your business, but they
can also lead to challenges for private
companies, particularly if an exit event is
not around the corner.
The average time for a technology company
to exit via IPO has gone from four years
in 1999 to 10.6 in 2018. This trend has
resulted in employees waiting longer than
ever to experience any liquidity on their
holdings. This predicament can result
in more than just low morale. It can also
induce some employees to seek alternative
ways to convert their holdings into cash.
Regardless of whether they choose to sell
to an unknown investor or go through a
secondary marketplace, these moves could
lead to a loss of control of the cap table
and the deterioration of the company’s
reputation in the eyes of investors, talent
and customers. Many companies may be
concerned about how the broader market
and, in particular, their investors may
interpret the pricing of these secondary
sales.
Fortunately, there are ways to proactively
address this compensatory challenge.
One way is the use of a tender offer, a
companywide, broad-based and controlled
liquidity event open to all employees
deemed eligible by the company. A tender
offer can mitigate common risks by
controlling how—and to whom—employees
sell their options and shares. While there
are different types of liquidity events,
tender offers are historically the method
selected by private companies offering a
liquidity event.
Tender offers enable companies to retain
control over their cap tables and provide
a fair, transparent tool for rewarding
employees and creating excitement. They
can help improve productivity, engagement,
retention and recruitment throughout
the company. Many companies choose to
extend this offer to former employees and
early investors as well. Once the offer is
presented, employees choose how much
of their holdings (if any) to tender for sale,
generally up to a predefined limit.
It’s not uncommon for employees working
at VC-backed companies to spend
considerable time speculating about the
timing of a future IPO or acquisition. For
companies that aren’t planning to have
an exit event within the next year or
Liquid gold: The hidden benefits of tender
offers
By Ryan Logue, Head of Business Development and Innovation, Private Market, Solium
1H 2017
1H 2018
Third party
7
20
Buybacks
12
13
Total programs
19
33
Total program value
$733M
$10B
Rise in private market stock
activity
Nasdaq Private Market
Ryan Logue is passionate about creating technology solutions that enable private companies to provide liquidity for their shareholders. Over the past eight
years, Ryan has assisted 200+ private companies in providing over $20B in liquidity to nearly 25,000 shareholders. Prior to joining Solium, he was COO of
Nasdaq Private Market. He is a graduate of Northeastern University School of Law and is based in New York City.
two, a tender offer can help remove that
distraction by giving employees some cash
to meet their personal financial needs.
Today, many companies are finding that
a tender offer can actually enhance
employee engagement. Experience at
numerous companies shows that employees
become more engaged because they’re
appreciative of the liquidity, and it makes
their contributions to the company real.
Additionally, gaining partial liquidity allows
them to relieve personal financial pressures
that might otherwise become distractions.
A regular tender offer program can also
bolster recruitment efforts, giving the
company a competitive edge in the constant
quest for top talent.

Tender offers have become an increasingly
popular tool for today’s leading private
companies. To learn more, visit solium.com/
liquidity_events.
25
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Exits
$10.9$19.7$8.8$27.1$12.7$79.7$16.9$16.1$5.3$14.4$20.3$32.2$23.1$22.6$20.7$49.4$11.4$19.8$22.3$18.7$18.7$20.1$19.8$10.7$32.6$16.3$15.1$28.4$27.7$31.8$20.90
50
100
150
200
250
300
$0
$10
$20
$30
$40
$50
$60
$70
$80
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2011
2012
2013
2014
2015
2016
2017
2018
Exit value ($B)
# of exits closed
$18.0$22.3$39.7$66.5$125.4$72.2$115.9$72.2$69.3$92.4$80.4484 483
700
738
870
899
1,077
1,015
884
871
637
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Exit value ($B)
# of exits closed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
The exit environment continues to show
signs of strength, as exit value YTD through
3Q sets the stage for the eclipse of full-
year 2017 data. With $80.4 billion of value
exited across 637 companies, activity
this year illustrates the proliferation
of large exits and VCs capitalizing on a
strong late-cycle market. We see this as
a significantly positive development for
the overall health of the future of VC, as
liquidity in the market has been a concern
for investors in recent years. Since we
haven’t seen a propagation of valuation
cuts at exit, the returns from these exits
enable attractive distributions back to LPs
that encourage reallocation to the VC asset
class and continued investment in growing
companies.
Capital exited in 3Q was supported by a
few large exits, including the acquisition
of AppNexus for about $2.0 billion and the
announcement of a $7.5 billion deal for
GitHub. The latter deal isn’t yet included in
our exit value data because it hasn’t closed
as of the end of the quarter, but it illustrates
the transition of VC further into the later
stages of the company’s life, likely making
the average VC exits larger for the duration
of this market cycle. These two deals also
broadcast positive signals about strategic
interest in staying competitive in the
shifting technology landscape. As Microsoft
reversed its longstanding aversion to open-
source software, and AT&T purchased more
digital capabilities through AppNexus, the
acquisition-for-innovation model still seems
alive and well.
While the late-stage and growth financing
abilities of the private markets have been
2018 on pace for robust exit activity
US VC exit activity
Exit value dips slightly in 3Q without host of mega-acquisitions
US VC exit activity
26
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*Buyout
IPO
Acquisition
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*Buyout
IPO
Acquisition
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
cited as a cause for the longer-term drop-
off in IPO counts, 2018 has shown that the
liquidity function is operating smoothly.
IPOs have continued their strong run in
2018—another dataset passing the full-year
2017 data through YTD 3Q—as myriad VC-
backed life sciences companies transitioned
to public markets. To illustrate, 17 out of 23
VC-backed IPOs in 3Q came from the life
sciences sector, as well as 45 out of 68 YTD
2018. VCs have shown some willingness
to fund late-stage, pre-revenue biotech
businesses, but the popularity of IPOs
has been cemented by public investors’
wealth of experience and familiarity with
this business model. The capital intensity
and regulatory considerations inherent in
biotech business models also play a role,
as the time and capital required to bring a
pharmaceutical to market are well beyond
the scope of the normal VC structure. While
current public market conditions remain
favorable, we expect to see healthy life
sciences IPO activity.
As the driver of the return in the VC cycle,
liquidity for VC-backed businesses through the
exit market is so critical to the asset class as a
whole. A diverse exit market with options to
cater to individual companies while enabling
attractive investor returns is a welcome
development for venture investors. With the
current environment characterized by an open
IPO window, increased PE interest in VC and
a recent cash windfall from tax reform for
strategic acquirers, it is little surprise that VC
exit data has been such a bright spot in 2018.
IPO and buyouts taking larger proportion
of exit value
US VC exits ($) by type
Exits greater than $500 million
contribute less value than in 2017
US VC exits ($) by size
Exits greater than $100 million making
up more than 60% of total deals
US VC exits (#) by size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
Composition of VC exit types become
more diverse
US VC exits (#) by type
27
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
How to spot Space 2.0 opportunities
By Ann Kim, Director of Hardware and Frontier Tech, Silicon Valley Bank
The private race to space is on. The commercial
applications are growing by leaps and bounds,
establishing new markets and disrupting
existing ones. Although a SpaceX Falcon rocket
first reached orbit a decade ago, only now
are investors—including Silicon Valley VCs—
growing more comfortable investing in space.
Advances in communication and satellite
technology are driving a whole new industry
centered on the miniaturization of satellites.
Many of the companies that launch the
rockets carrying these payloads to space are
relative newcomers. Consider that while the
overall number of launches is relatively stable,
newcomers (companies making their first
rocket launch in the past 10 years) are taking a
much larger slice of the pie.
Still, challenging hurdles remain for investors
and entrepreneurs. Because the technology is
evolving so quickly and government oversight
can be complicated, tapping knowledge and
experience is key for investors seeking to
identify the best deals and provide true value
to the entrepreneurs they choose to back.
Experience in space counts
Government agencies have historically
dominated the satellite sector. But with the
arrival of the CubeSat, a nanosatellite that can be
built for a fraction of the cost of earlier-generation
satellites, new companies are springing up.
Sometimes, the founders formerly worked for
NASA and other agencies and have moved to the
private sector to more quickly iterate and move
concepts from idea to execution.
Rocket Lab, which started as a New Zealand-
based developer of propulsion systems
and launch vehicles for government and
commercial customers, is a pioneer in rocket
launches designed for small satellites as the
primary payload to be placed in low Earth orbit.
The rush to space has driven others to consider
new approaches; this includes SpinLaunch, a
Silicon Valley-based company that is building
a space catapult, as well as Zero 2 Infinity, a
Spanish company that is using high-altitude
balloons to accomplish the task.
Advances in earth-imaging technology are also
presenting new commercial applications and
investment opportunities. With the application
of machine-learning techniques, data from
space becomes more valuable to businesses
and government. Also, the miniaturization of
SAR (Synthetic Aperture Radar) sensors—
which “see” through cloud cover and survey at
night—are poised to add another layer to the
imaging market. Underscoring how experience
counts in this business, the founding team of
Planet, a provider of satellite imagery data, had
worked at NASA on lunar orbiter and small-
spacecraft missions, as well as others.
Financing opportunities are growing
While barriers to entry remain very high for
rocket commercialization compared with other
technologies, near-term market opportunities,
particularly around small satellites, are enticing
investors. Last year, Vector, an Arizona-based
small-rocket company led by a former SpaceX
executive, raised a $21 million Series A round.
The round was led by Sequoia Capital, and the
proceeds are being used to build a program
to offer launches for as little as $3 million.
Other VCs active in space investments include
Bessemer Venture Partners, Draper Fisher
Jurvetson and Khosla Ventures.
Industry-specific funds, such as Space Angels
and the United Kingdom-based Seraphim
Space Fund, have grown in recent years.
Some entrepreneurs find that partnering
with strategic corporate investors can be
helpful, for example, to gain a pilot customer
for their product and speed up the path to
commercialization.
What’s next for space investors?
While earth imagery, small rockets and
satellites are attracting investments today,
the longer-term opportunities for space
tourism, mining and manufacturing may
hold the biggest promise. For entrepreneurs
and investors alike, industry experience is
fundamental when tackling the challenges of
space commercialization.
The path to commercialization here, however,
is littered with uncertainty and heavily
influenced by politics, regulation and public
perception, leaving most investors on the
sidelines for now. Navigating International
Traffic in Arms (ITAR) regulations, the
Committee on Foreign Investment in the
United States (CFIUS) process—which is
focused on national security issues—and the
requirements of government contracts takes
experience and persistence.
For 35 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial
services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address
the unique needs of innovators. Learn more at svb.com.
©2018 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device
are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the
California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
28
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Fundraising
$31.6$11.9$20.1$25.7$24.4$21.1$36.4$36.8$41.1$35.3$32.4190
119
151
151
206
220
295
296
324
288
230
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Capital raised ($B)
# of funds closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$1B+
$500M-
$1B
$250M-
$500M
$100M-
$250M
$50M-
$100M
Under
$50M
$50.0
$68.0
$132.2
$151.3
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
20082009201020112012201320142015201620172018*Median
Average
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
Venture funds secure $32.4 billion in commitments
through 3Q
US VC fundraising activity
Growing proportion of funds larger than
$250M
US VC fundraising (#) by size
Median fund size trends to five-year high
of $68M
Median and average US VC fund size ($M)
Venture fundraising in 2018 is on track for
another healthy showing, currently pacing
to reach over $30 billion in commitments
for the fifth consecutive year. While
historically VCs have favored smaller funds,
recent years have seen an increasing focus
on larger vehicles. The number of micro-
funds closed has steadily decreased in the
last three years and, of the 230 funds closed
so far this year, 41.7% are larger than $100
million (compared to 33.5% in 2015). This
observation contributes to a trend that has
been salient throughout the year—elevated
levels of available capital for startups.
With venture rounds growing ever-larger
and increased competition among investors,
some venture fund managers have
gradually adjusted their strategy to target
larger vehicles. Median and average fund
sizes have trended to 10- and eight-year
highs of $68.0 million and $151.3 million,
respectively. So far in 2018, VCs have
raised 27 vehicles in the $250 million-$500
million range, surpassing 2017’s final count
of 25. The numbers also show that 2018
surpassed last year’s billion-dollar fund
count (three in total), with five vehicles
closed at $1 billion or greater.
Some investors have noted that mega-
funds, such as SoftBank’s behemoth Vision
Fund, have “shocked” venture markets by
using outsized financings as a competitive
tool to pick and nurture winning startups.
Large capital infusions can be a crucial
differentiator for both investors and
startups. With high competition among
venture investors, those with larger funds
and the ability to write bigger checks have
a significant advantage when looking to
close deals with leading late-stage startups.
29
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
$3.1$1.1$1.0$1.9$1.7$1.5$1.9$2.3$2.5$3.9$3.230
24
33
19
32
24
44
32
29
50
44
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Capital raised ($B)
# of funds closed
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
First-time funds on track to outpace 2017 numbers
US VC first-time fundraising
For startups, these sums are vital for grabbing
market share, achieving scale, and facilitating
talent acquisition, especially for consumer-
focused startups with high customer-
acquisition costs.
At the same time, critics argue that deep-
pocketed investors run the risk of overlooking
inherent flaws in startups such as capital
inefficiency and a lack of a long-term path to
profitability. The multitude of mega-funds raised
recently will keep startups well capitalized for
the foreseeable future, which in turn will keep
valuations and round sizes elevated barring a
significant economic downturn.
Some additional factors driving larger funds
come from the LP side. First, while larger
institutional investors have looked toward
the venture asset class to drive returns and
diversification, their minimum check size is
far above the typical threshold of a traditional
$50 million-$100 million venture fund size,
facilitating cash flows to larger vehicles.
Second, the administrative and management
costs associated with manager selection
have induced some LPs to consolidate
their allocations in larger sums to fewer
managers. Finally, our recent research on fund
performance suggests that larger venture
funds have outperformed smaller vehicles, and
that net cash flows to LPs remain positive.
While larger funds are pervasive in
developed venture hubs like Silicon Valley,
smaller fundraises throughout the rest
of the country highlight growing and
emerging venture hubs that are slowly
aggregating more local resources. Select
GPs investing in emerging ecosystems
include the Alabama Futures Fund
(investing exclusively in Alabama), Seven
Peaks Ventures (investing in Oregon and
larger markets in the Pacific Northwest)
and One Better Ventures (investing in
North Carolina). These vehicles tend to
be smaller given the supply of startups
in these emerging ecosystems are often
in earlier stages of development and the
relatively smaller pool of LPs interested
in such vehicles. Additionally, the costs of
living and running a business tend to be
lower in these regions, decreasing the need
for outsized funding rounds. As more VCs
look to opportunities outside Silicon Valley,
early movers will play a vital role in the
capitalization and maturation of startups in
these emerging ecosystems.
Investors deploying capital at a rapid clip
Capital raised versus capital invested ($B)
$37.1 $27.1 $31.3 $44.7 $41.5 $47.5 $70.8 $81.0 $75.9 $81.0 $83.3 $31.6 $11.9 $20.1$25.7 $24.4 $21.1 $36.4 $36.8 $41.1 $35.3 $32.4 $0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Capital invested
Capital raised
PitchBook-NVCA Venture Monitor
*As of September 30, 2018
3 0
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
3Q 2018 league tables
Plug and Play Tech Center
31
Keiretsu Forum
13
Keiretsu Capital
11
Rev1 Ventures
10
Hatcher Plus
8
Alliance of Angels
8
New Media Ventures
7
Connecticut Innovations
7
Techstars
6
Alumni Ventures Group
5
Baidu Ventures
5
First Round Capital
5
Social Capital
5
Crosscut Ventures
4
Greycroft
4
Khosla Ventures
4
Madrona Venture Group
4
Service Provider Capital
4
Sinai Ventures
4
Slow Ventures
4
SOSV
4
SV Angel
4
Village Global
4
Y Combinator
4
Most active investors
angel & seed
Most active investors
early stage
Most active investors
late stage
Keiretsu Forum
30
Keiretsu Capital
23
Alumni Ventures Group
22
Plug and Play Tech Center
17
F-Prime Capital Partners
12
Alexandria Venture Investments
10
Andreessen Horowitz
10
Kleiner Perkins
10
Y Combinator
10
General Catalyst
9
GV
9
Khosla Ventures
8
SV Angel
8
Connecticut Innovations
7
8VC
7
Bessemer Venture Partners
7
Service Provider Capital
7
Social Capital
7
ARCH Venture Partners
6
BoxGroup
6
Elevate Ventures
6
First Round Capital
6
Founders Fund
6
M25
6
New Enterprise Associates
6
Sequoia Capital
6
Tusk Ventures
6
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
New Enterprise Associates
17
Accel
15
Alumni Ventures Group
12
Kleiner Perkins
11
GV
10
Salesforce Ventures
9
Andreessen Horowitz
8
Keiretsu Forum
8
Revolution
7
Y Combinator
7
Battery Ventures
6
Khosla Ventures
6
Bain Capital Ventures
5
Bessemer Venture Partners
5
CapitalG
5
GE Ventures
5
GGV Capital
5
Keiretsu Capital
5
Polaris Partners
5
Scale Venture Partners
5
Sequoia Capital
5
SV Health Investors
5
PitchBook-NVCA Venture Monitor
Methodology
Fundraising
We define VC funds as pools of capital raised for the purpose of investing in the equity of startup companies. In addition to funds raised
by traditional VC firms, PitchBook also includes funds raised by any institution with the primary intent stated above. Funds identifying as
growth-stage vehicles are classified as PE funds and are not included in this report. A fund’s location is determined by the country in which
the fund is domiciled; if that information is not explicitly known, the HQ country of the fund’s general partner is used. Only funds based
in the United States that have held their final close are included in the fundraising numbers. The entirety of a fund’s committed capital is
attributed to the year of the final close of the fund. Interim close amounts are not recorded in the year of the interim close.
Deals
We include equity investments into startup companies from an outside source. Investment does not necessarily have to be taken from an
institutional investor. This can include investment from individual angel investors, angel groups, seed funds, VC firms, corporate venture
firms, and corporate investors. Investments received as part of an accelerator program are not included, however, if the accelerator
continues to invest in follow-on rounds, those further financings are included. All financings are of companies headquartered in the US.
Angel & seed: We define financings as angel rounds if there are no PE or VC firms involved in the company to date and we cannot determine
if any PE or VC firms are participating. In addition, if there is a press release that states the round is an angel round, it is classified as such.
Finally, if a news story or press release only mentions individuals making investments in a financing, it is also classified as angel. As for
seed, when the investors and/or press release state that a round is a seed financing, or it is for less than $500,000 and is the first round as
reported by a government filing, it is classified as such. If angels are the only investors, then a round is only marked as seed if it is explicitly
stated.
Early-stage: Rounds are generally classified as Series A or B (which we typically aggregate together as early stage) either by the series of
stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing
history, company status, participating investors, and more.
Late-stage: Rounds are generally classified as Series C or D or later (which we typically aggregate together as late stage) either by the series
of stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing
history, company status, participating investors, and more.
Growth equity: Rounds must include at least one investor tagged as growth/expansion, while deal size must either be $15 million or more
(although rounds of undisclosed size that meet all other criteria are included). In addition, the deal must be classified as growth/expansion or
later-stage VC in the PitchBook Platform. If the financing is tagged as late-stage VC it is included regardless of industry. Also, if a company is
tagged with any PitchBook vertical, excepting manufacturing and infrastructure, it is kept. Otherwise, the following industries are excluded
from growth equity financing calculations: buildings and property, thrifts and mortgage finance, real estate investment trusts, and oil & gas
equipment, utilities, exploration, production and refining. Lastly, the company in question must not have had an M&A event, buyout, or IPO
completed prior to the round in question.
Corporate VC: Financings classified as corporate VC include rounds that saw both firms investing via established CVC arms or corporations
making equity investments off balance sheets or whatever other non-CVC method actually employed. Rounds in VC-backed companies
previously tagged as just corporate investments have been added into the dataset.
Capital efficiency score: Our capital efficiency score was calculated using companies that had completed an exit (IPO, M&A or PE Buyout)
since 2006. The aggregate value of those exits, defined as the pre-money valuation of the exit, was then divided by the aggregate amount
of VC that was invested into those companies during their time under VC backing to give a Multiple On Invested Capital (MOIC). After the
average time to exit was calculated for each pool of companies, it was used to divide the MOIC figure and give us a capital efficiency score.
Exits
We include the first majority liquidity event for holders of equity securities of venture-backed companies. This includes events where there is a
public market for the shares (IPO) or the acquisition of majority of the equity by another entity (corporate or financial acquisition). This does not
include secondary sales, further sales after the initial liquidity event, or bankruptcies. M&A value is based on reported or disclosed figures, with
no estimation used to assess the value of transactions for which the actual deal size is unknown. IPO value is based on the pre-money valuation
of the company at its IPO price.
COPYRIGHT © 2018 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical,
including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of PitchBook Data, Inc. Contents are based
on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future
recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a
prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.
31
3Q 2018 PITCHBOOK-NVC A VENTURE MONITOR
Why we teamed up
Meet the PitchBook-NVCA Venture Monitor
NVCA is recognized as the go-to organization for
venture capital advocacy, and the statistics we
release are the industry standard. PitchBook is
the leading data software provider for venture
capital professionals, serving more than 1,800
clients across the private market. Our partnership
with PitchBook empowers us to unlock more
insights on the venture ecosystem and better
advocate for an ever-evolving industry.
A brand-new, quarterly report that
details venture capital activity
and delivers insights to inform your
investment strategy. PitchBook’s
data will also bolster our
year-in-review publication.
The PitchBook Platform
T H E P E R K S O F P A R T N E R S H I P
As an NVCA member, your free access to the
PitchBook Platform includes five advanced
searches and five profile views per month.
More data. Less dough.
Our members get 10% off a new subscription
to the PitchBook Platform (up to a
$10,000 value) or one free, additional set. If
your firm was a PitchBook client prior to
September 14, 2016, you’re eligible for one
of these discounts the next time you renew
your contract.
Help us help you
We will email quarterly surveys to each
member firm, which will give you the
opportunity to report your activity to
PitchBook. The data you provide will
not only power PitchBook-NVCA reports,
but also ensure your firm is represented
accurately in the PitchBook Platform. If
you’d like to send your quarterly activity
report directly to PitchBook, email
research@pitchbook.com.
The 411 on the PitchBook
and National Venture Capital
Association (NVCA) partnership
Fundraise faster with targeted searches for
limited partners who will likely be interested
in your fund.
Conduct better due diligence by diving deep
into a company’s round-by-round financing
history, executive team and market traction.
Price deals with confidence using pre- and
post-money valuations, public and private
comps, cap tables and series terms.
Find promising investors quickly by zeroing
in on other firms or strategic acquirers
whose investment preferences match your
portfolio company.
PitchBook Data, Inc. | 206.623.1986 | pitchbook.com/nvca
National Venture Capital Association | 202.864.5920 | nvca.org
Ready to get started with the PitchBook Platform? Go to pitchbook.com/nvca