2Q 2018
Massive $57.5B invested into
US VC-backed companies
through 1H
Page 4
The definitive review of the US venture capital ecosystem
IPOs riding back toward decade
highs, as overall exit value
remains elevated
Pages 27
League tables for 2Q deals,
investors, exits and more
Pages 32
In partnership with
Credits & Contact
PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Research & Analysis
Content
KYLE STANFORD Analyst
CAMERON STANFILL Analyst
ALEX FREDERICK Analyst
BRYAN HANSON Senior Data Analyst
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
DAVID M. SABOW Group Head of Life Sciences,
Client Funds and Bank Products
JIM MARSHALL Head of Emerging Manager Practice
STEVEN PIPP, CFA Research Manager

Contact Silicon Valley Bank
svb.com
venturemonitor@svb.com
Perkins Coie
BUDDY ARNHEIM Partner, Emerging Companies &
Venture Capital
FIONA BROPHY Partner, Emerging Companies &
Venture Capital
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& Venture Capital

Contact Perkins Coie
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Solium
KEVIN SWAN VP Corporate Development
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Executive summary
3
Overview
4
Angel/seed
8
First financings
9
Early-stage VC
10
Late-stage VC
11
SVB: Adapting to capital overload: Investors chart
new paths
12
Activity by region
13
Activity by sector
15
Life sciences
16
Q&A: Research boom in life sciences benefitting
patients and investors alike
17
Corporate VC
20
Perkins Coie: An evolving VC market needs
evolving participants
22
Growth equity
24
SVB: Nontraditional investors, family offices seek
earlier-stage deals
26
Exits
27
Fundraising
29
League tables
32
Methodology
35
Contents
2
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Executive summary
3
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
At the halfway point of 2018, the US venture capital ecosystem continues to see the crystallization of a new normal where capital
is concentrated into fewer, larger deals. At the same time, the improved access to the IPO market—particularly for enterprise tech
companies—has been a welcome trend. The recently wider window of opportunity in the IPO market is certainly a positive development
after several lackluster quarters in 2016 and early 2017, and many industry professionals have an optimistic outlook, although the
longevity and level of openness remain to be seen.
2Q 2018 was the fifth consecutive quarter with 10+ venture-backed IPOs, which is good news despite not having reached the full
potential predicted for well over a year. The strength of the venture-backed IPO market during this moderately successful run has been
primarily driven by biotech companies, which continue to account for the majority of venture-backed IPOs. In comparison, the tech
IPO market has remained relatively subdued, although enterprise tech IPOs have been strong in 2018 and have come to overshadow
consumer tech IPOs in both number and post-IPO valuations.
The rising success of enterprise tech IPOs has fueled public market optimism, but masks the longer-term issue of fewer public companies
in the US. Today, the US has about half the number of total listed companies compared to 20 years ago, despite GDP more than doubling
over that time. This major reduction in both IPOs and the number of public companies in the US is now coinciding with highly-valued
venture-backed companies, i.e. unicorns, staying private longer. These trends bring to light two concerns: 1) the long-term health of the
US public markets, and 2) public market investors losing out on investment gains during the high-growth phase when companies are still
private.
The decline in venture-backed IPOs and in the number of public companies in general can largely be traced to three major trends that
have appeared since around 2000: 1) the increase in costs and complexity of being a public company; 2) the collapse of research coverage
and liquidity for small capitalization companies; and 3) the market focus on short-termism that harms innovative companies with long-
term time horizon projects.
To address these complex issues, NVCA and the venture industry remain engaged with policymakers and regulators, and together with
the Chamber of Commerce and other organizations last April, released the report titled “Expanding the On-Ramp: Recommendations to
Help More Companies Go and Stay Public.” The report provides a blueprint for policymakers to address the challenges to both launching
IPOs and remaining a public company, as well as policy recommendations for enhancements to the reforms put in place by the 2012 JOBS
Act. Several of these proposals have already been passed out of the House Financial Services Committee.
While the short-term outlook remains positive for the IPO market, M&As, which have typically been the dominant liquidity path
for venture-backed companies, have had a slow year through the first half. Some venture investors, however, anticipate seeing an
acceleration of M&A activity in tandem with a more active IPO window.
Though the federal tax reform bill passed in late 2017 preserved key industry priorities and avoided other tax increase proposals, VCs
in California have since been faced with a proposal to impose an additional 17% surtax on carried interest, which could do significant
damage to the dominant hub of the world’s entrepreneurial ecosystem.
Venture firms, NVCA and other groups jumped into a state advocacy campaign and fought against this surtax, including sending a
VC sign-on letter with over 178 signatories opposing the proposed state legislation. While many states across the US and countries
around the world try to emulate California’s dominance in high-growth startup activity, if this surtax is put in place, the impact on the
entrepreneurial ecosystem would be extremely disruptive to the California entrepreneurial economy. While the issue’s momentum has
been blunted in 2018, it will be back in 2019.
Looking ahead, two other public policy issues that could have a significant impact on VCs and startups are: 1) immigration, specifically
the Department of Homeland Security’s delay and intention to rescind the International Entrepreneur Rule (IER); and 2) the ongoing
movement in Washington to scrutinize foreign investment into the US—particularly from China. In late June, NVCA and the venture
community’s defense of the IER continued through the filing of a comment letter and highlighting the impact that immigrant
entrepreneurs and the companies they found have had on the US economy and innovation. Related to foreign investment, the proposed
Foreign Investment Review Risk Modernization Act (FIRRMA) threatened to increase oversight over foreign LPs and co-investors by
the Committee on Foreign Investment in the US. As FIRRMA was considered on Capitol Hill, NVCA improved the legislation through its
advocacy efforts. The bill is highly likely to become law this year, and NVCA will continue to engage on this topic during the rulemaking
process.
Setting aside public policy curveballs, the resilience of the venture ecosystem and the drive toward innovation and investment returns
forges on. Total capital invested into high-growth startups and total capital raised by venture funds show no signs of slowing down in 2H
2018, with full-year capital invested on track to reach another record high and capital raised on track to hit at least $30 billion for the fifth
consecutive year.
4
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
$37.1$27.0$31.3$44.4$41.7$47.4$71.9$82.2$75.6$81.9$57.54,716 4,470
5,388
6,738
7,865
9,244
10,509 10,606
8,939
8,815
3,997
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
0
500
1,000
1,500
2,000
2,500
3,000
3,500
$0
$5
$10
$15
$20
$25
$30
$35
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
Angel/Seed
Early VC
Late VC
Overview
2018 deal value has surpassed six of past 10 years
US VC activity
Past two quarters result in highest quarterly deal values in past decade
US VC activity
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
For an industry that has been characterized
by capital availability over recent years,
the first half of 2018 has only exacerbated
feelings of excess with more capital
invested in a six-month timeframe than
any time in recent memory. Through 2Q,
$57.5 billion has been invested in US VC-
backed companies, exceeding the full-year
total for six of the past 10 years. Beyond
basic measures of VC investment, 1H has
also seen 94 financings completed of at
least $100 million, 42 unicorn financings—
including seeing Bird reach unicorn status
in just 12 months—and the first close of
the largest US VC fund ever. To say capital
availability is high would be putting the true
state of the US VC industry lightly.
US VC deals have continued to grow in size,
and not only at the top end of the market.
Angel & seed deals this year have come
in at a median size of $830,000 and $2.1
million, respectively, each a new decade-
high figure for the time being. Together,
those deals have come along with a median
valuation of $7 million, which sits at
roughly double the median valuation of the
stage from 2012, and is $1 million higher
than 2017’s figure. The upward shift in deal
sizes has now persisted for almost the past
decade across all stages. And while mega-
deals continue to add an increasing bulk
to overall figures, smaller deal size buckets
are also gaining steam. For example, early-
stage deals between $10 million and $25
million are on pace to surpass $10 billion in
aggregate deal value this year, the first time
we have seen that happen. The reasons for
this growth are plentiful, but the number of
5
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
PE investors continue to join large rounds
US VC activity with PE participation
Unicorns set for record year
US unicorn activity
Companies aren’t entering VC lifecycle until later
Median age (years) of companies by series
$0.6$0.8$0.9$6.3$2.4$2.6$13.6$16.9$18.5$17.4$11.86
7
9
27
24 23
71
80
55
72
42
20082009201020112012201320142015201620172018*Deal Value ($B)
# of Deals Closed
$11.0$7.0$6.7$12.4$9.2$10.5$21.1$27.0$26.0$22.6$17.6680
465
433
532
566
655
787 780
660
646
368
20082009201020112012201320142015201620172018*Deal Value ($B)
# of Deals Closed
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
investors active within the US VC industry
continues to be a major reason. That 2018
is pacing to see more than 300 new funds
close this year only adds to the growing
opportunities for founders to raise.
Nontraditional investors continue to move
into the market as well, with 2018 currently
pacing to be the fifth consecutive year that
more than 1,500 deals were completed
with participation from these investors—PE
firms alone have been involved in 368 VC
deals already. These deals have combined
for over $36 billion of invested capital,
roughly 63% of the total capital invested
in 1H. Nontraditional investors are both
a partial cause—VC funds themselves
have had more dry powder with which to
work over the past few years than ever
before—and a result of companies staying
private longer. The likelihood is high that
these firms continue to stay active within
VC, given that companies continue to stay
private longer while also needing capital
infusions to continue growth. The average
time to exit in 2018 is 6.1 years from the
first VC financing the company has raised.
This figure has risen nearly each year over
the past decade, and, coupled with the high
capital availability from VCs, is a reason for
the high increase in unicorns and other high
valuations.
Unicorns themselves have had an active
year in both dealmaking and exits. 42
companies have closed deals with a
valuation of at least $1 billion, pacing the
year to reach the previous high from 2015.
Bird, an electric scooter transportation
company, became the fastest company to
reach the coveted unicorn valuation after
it raised its fourth round in less than 12
months—the company has since raised
another round at a valuation of $2 billion.
As the number of unicorns continues
to grow, so do the paper gains and the
unrealized value still illiquid from investors
and LPs. For unicorn rounds raised in
2018, the average time between the new
funding and the company’s first VC round
has stayed above six years, nearly as long
as the average time to exit. Though six
US unicorns have completed an exit this
year, and several others are waiting in IPO
registration, the extended risk profiles will
likely claim several victims. Domo, once
valued at $2.3 billion, has seen its value
3.1
3.9
5.2
6.8
8.2
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
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
drop below $600 million after completing
its IPO. This is something that we have
expected to happen, especially as unicorns
have continued to raise further rounds and
grow in the private market.
Though exits overall have stayed low
relative to the 2014 and 2015 highs, more
exits have been completed this year than
had been at the same time period last year.
The median exit size has reached $105
million, and the average has surpassed
$225 million, each representing the highest
exit value figure we have tracked. The
average post-valuation of 2018 exits sits
at $581 million after 1H, more than double
the value seen in full-year 2016, and more
than $150 million higher than even 2017’s
average value. Despite a lower number of
completed exits than has been seen in the
past, it’s undeniable that capital is being
returned to investors, even if it may be
taking longer.
The fundraising environment, which has
stayed hot, may indicate that exit timelines
will continue to lengthen and companies
will continue growth in the private market.
Eight funds have been closed on at least
$500 million, including two larger than $1.3
billion. But still in the market is Sequoia’s
record-setting fund that has targeted a
reported $8 billion in size—the firm has
held a first close on $6 billion. The global
fund is seemingly the first domino to fall as
a result of SoftBank’s activity, offering some
companies an alternative investor when
seeking massive late-stage financings,
especially if the company isn’t looking to
raise the minimum $100 million the Vision
Fund seeks to invest. Sequoia’s fund is
undoubtedly an outlier within the industry,
but the median fund size continues to
creep upward, hitting $65 million through
2Q. Though larger funds don’t necessarily
need a longer lifecycle, the flexibility that
is available because of the extra capital
allows these investors to stay with private
companies and invest further into the
lifecycle of winners. With the year pacing
to see 320 new US VC funds entering the
market this year, we don’t believe that
current trends will subside in the near term.
This year will likely become the fifth straight
year to record more than $30 billion in
new commitments, adding dry powder to a
market already awash with capital.
6.3
6.1
5.3
5.0
4.0
4.5
5.0
5.5
6.0
6.5
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
Average
Median
Exit times lower slightly in 2018
Median and average time (years) to exit
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Deal Value ($B)
VC Fund Capital Raised ($B)
VC capital raised has tracked well with overall deal value
Capital raised vs. capital invested ($B)
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
7
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
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8
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
$682.3$591.7$531.7$754.3$852.8$1,134.5$1,253.1$870.0$1,573.7$1,088.0$1,379.1$1,585.4$1,279.8$1,418.1$2,171.0$1,903.4$2,092.2$2,176.2$2,160.2$1,918.8$1,698.5$1,714.0$1,725.4$1,544.0$1,625.5$1,684.0$1,931.7$1,736.1$1,918.6$1,839.30
200
400
600
800
1,000
1,200
1,400
1,600
$0
$500
$1,000
$1,500
$2,000
$2,500
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($M)
# of Deals Closed
Angel & seed deal value has slowly crept back toward highs of 2015
US angel & seed activity
Angel & seed
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
$0.56
$0.83
$1.68
$2.12
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
2010
2011
2012
2013
2014
2015
2016
2017 2018*
Angel
Seed
Deal sizes continue to grow
Median US angel & seed deal size ($M)
Despite predictions of a continuing
decline, the angel & seed market has
remained exceptionally steady in the first
half of 2018, especially in terms of capital
investment. While still on a downward
trajectory, deal counts are falling at a
slower rate than in 2015 and 2016. Capital
invested has been more resilient, with
angel & seed activity closely matching the
broader VC market’s trend of fewer but
larger deals. In 2Q 2018, capital invested
came in only slightly below the previous
quarter with $1.8 billion invested across
792 deals.
While the angel & seed deal count has
declined over the last three years, it is
key to view the data over a longer time
horizon. For instance, even after falling two
consecutive years from a peak in 2015,
the current average quarterly investment
level is still four times higher than the most
active quarter in 2008. The initial run-up
in angel & seed activity that began in the
early 2010s came on the back of a number
of sizable VC exits (the largest of which
was Facebook), which minted a large group
of newly wealthy individuals who wanted
to invest in the next generation of private
technology firms. As competition increased
at the earliest stages of investment, many
of these entrepreneurs and high-net-worth
individuals have been spurred to launch
their own VC firm or join angel groups to
access larger deals.
This increasing institutionalization of the
angel & seed space is a huge driver of
the shift we’re seeing in the ecosystem.
Deal sizes are expanding to unforeseen
levels, but this has coincided with
complementary step-ups in the median
percentage acquired, which has crept up
to 26.7% from 20% just five years ago.
This shift has occurred as investors need
to reconcile the need to offer more capital
to nascent startups while reconciling
the economics and overall risk/return
characteristics of their fund, which calls
for taking an increased percentage of
ownership. Investors have also responded
by becoming more selective in the
companies they back, requiring companies
to be more mature than they have been
historically. Especially with the high failure
rates in the initial stages of a company’s
life, investing in fewer companies goes
against the traditional seed strategy and
creates more concentration risk in the
portfolio, necessitating increased scrutiny
of investments.
9
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
First financings
$5.8$4.0$4.5$6.0$7.1$7.2$7.7$8.8$7.0$7.3$5.41,720 1,626
2,034
2,736
3,213
3,456
3,676
3,427
2,667
2,545
947
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
1H pacing year for new record
US first financing VC activity
Slight uptick in first financing deal value
US first-financing as % of total US VC activity
0
2,000
4,000
6,000
8,000
10,000
12,000
20082009201020112012201320142015201620172018*First VC
Follow-on VC
First-time deals pacing for down year
US first-financing VC rounds vs. follow-on VC rounds
8.9%
9.3%
28.9%
23.7%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value
Deal Count
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$1.1
$1.5
$3.2
$6.3
0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Median
Average
First financings sizes on upward swing
Median and average US VC first financing size ($M)
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10
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Early-stage VC
$4.6$5.2$4.9$5.6$4.9$7.2$6.3$6.3$6.1$6.2$6.2$5.0$5.6$6.8$7.5$9.5$9.6$10.50
100
200
300
400
500
600
700
800
900
$0
$2
$4
$6
$8
$10
$12
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2014
2015
2016
2017
2018
Deal Value ($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
$8.7
$11.3
$24.3
$29.3
$0
$5
$10
$15
$20
$25
$30
$35
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Series A
Series B
Companies raising more early
US early-stage activity (#) by size
Deal sizes growing rapidly
Median amount raised ($M) at time of funding by series
As large investors move in, early-stage capital grows
US early-stage VC activity
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
Early-stage investing continues to climb
higher, recording a seventh straight
quarterly increase in capital invested. In the
second quarter, we recorded $11.5 billion
invested into early-stage companies with
the average deal size growing to a decade
high of $18 million. Outlier deals drove the
investment total even higher, as the capital
availability for giant funding rounds moves
into earlier stages of the market. This is
manifested through 24 $100+ million
funding rounds, including the $100 million
Series A raised by machine-learning drug
discovery company Insitro, led by Foresite
Capital Management, Andreessen Horowitz
and ARCH Venture Partners.
While these deals are obviously not
representative of the entire early-stage
market, they are indicative of the massive
amount of capital being put to work in the
asset class regardless of stage. Indeed,
deals over $25 million now make up more
than 50% of 2018 early-stage deal value.
Furthermore, the median amount of capital
raised by companies at the Series A and B
level has shown a steady uptrend over the
past decade. This has pushed the median
at Series A to $11.3 million and Series B to
$29.3 million, representing a greater than
twofold increase from 10 years ago, further
illustrating the extreme shifts even at the
early stage.
At the sector level, fintech has received
considerable attention from early-stage
investors, representing 11% of deal count
in 2Q 2018. Startups that utilize blockchain
technology to innovate on financial
processes have become more prevalent
over the past quarter, with three of the five
largest fintech rounds raised by companies
boasting a blockchain focus. This list
includes enterprise blockchain provider R3,
settlement platform Paxos and home equity
lender Figure. Financial services is one of
the more clear applications for blockchain
technology, as the transactional aspect
meshes with blockchain’s primary benefits
such as immutability and security.
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$9.5$6.6$7.2$5.0$5.8$6.6$6.3$6.0$6.2$6.7$7.1$6.8$9.3$13.4$9.8$12.2$13.1$11.2$13.9$10.9$11.8$15.5$10.0$8.1$8.7$12.4$15.2$9.3$18.7$14.90
100
200
300
400
500
600
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
Investment into the late stage continues
at a strong clip, as the definition of what
constitutes as the “late stage” is stretched
by a steady feed of new unicorns and aging
decacorns that are delaying liquidity events.
This past quarter, $15 billion was invested
into 475 late-stage deals. With essentially
no change in deal count from the first
quarter, this represents a remarkably
steady volume of deals at the late stage,
as investors sustain their demand for
developed businesses in the private
markets.
This demand was evident in valuations at
the late stage in 2Q 2018, which extended
to $278 million—24% higher than 2017’s
already lofty valuations. Selling smaller
ownership stakes for larger sums of capital
is common as a company gains traction,
but this has become a necessity to retain
the performance incentive for founders
and vested employees of VC-backed
companies. As the age of companies
seeking late-stage rounds has extended
to unprecedented levels, though, a knock-
on effect of raising more venture rounds
is a lack of room on the cap table. With
each subsequent round, the company
must weigh the tradeoffs of diluting the
employees’ and founder’s ownership stakes
against fulfilling the company’s increasing
appetite for cash to sustain growth.
Another impetus for raising additional
rounds is that holding large current cash
balances or having the ability to raise
huge sums has become a key competitive
advantage in many business models. For
instance, Airbnb’s extensive fundraising
history and ability to raise billions of dollars
represent huge barriers to entry for other
firms in the short-term hospitality rental
market.
On a similar note, secondary selling into
late-stage financings has become more
common as a means of providing liquidity
to earlier investors or employees while
making space on the cap table. The most
extreme example was the $8 billion
secondary sale of Uber in January, but
these deals have been occurring with more
frequency over the last few years. This is
a logical progression as companies raise
increasingly more capital and retain private
status longer. It allows early investors
to achieve some liquidity and close out
their funds without forcing an exit, plus
employees can realize some gains and take
some risk off the table. Since the drivers of
the “private for longer” trend don’t seem to
be going anywhere, we expect secondary
sales to become an increasingly integral
part of the VC environment.
11
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Late-stage VC
Quarterly late-stage deal values rising
US late-stage activity
PitchBook-NVCA Venture Monitor
60% of deals over $10M
US late-stage activity (#) by size
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
12
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Adapting to capital overload: Investors
chart new paths
Welcome to the era of mega-funds.
Triggering a capital arms race never before
seen, nontraditional investors are pushing
private capital in the innovation economy
to dizzying levels. Is this good for the VC
ecosystem? It depends on where you
operate in the innovation landscape.
We are beginning to see indications
of how these super-sized funds, with
capital sourced from across the globe, are
impacting companies—from the seed and
early stages to the late stage, and even
public assets.
Private markets dominate led by SoftBank
Mega-rounds of $100 million+—aka PIPOs—
have outpaced US tech IPOs in every
quarter over the past four years. Under
the surface, the source of those private
investments has changed dramatically.
Mutual funds and hedge funds have scaled
back their fervor since 2013–2015, and PE
seemingly awaits more favorable valuations.
Still, in 1H 2018, we saw 93 PIPOs—nearly
matching previous annual totals (see chart).
This is partly due to SoftBank’s insatiable
appetite for innovative tech assets, which
appears to only be growing. In 1H 2018,
SoftBank led five $100 million+ rounds
in the US. And in May, Masayoshi Son
announced that he is planning a second
mega-fund in the near future.
Even as more companies seek IPOs in
2018, it appears the PIPO will continue to
dominate, allowing today’s best performers
to stay private much longer than their
predecessors. With this pattern established,
how are investors reacting?
Extended horizons at the early stage
Venture firms are not ceding their territory.
In fact, the immense global investor
interest in innovation has allowed the upper
echelon of VCs to restock their war chests
with significant capital to ensure continued
participation, even as their portfolio
companies raise multiple late-stage rounds.
Such abundant capital will result in upward
pricing pressure across the ecosystem,
impacting classic VC models. Elevated
valuations make it harder for investors
to obtain the returns expected from
an alternative asset class. Indeed, the
behemoths have created a bifurcated
market, with the perceived “better”
companies getting significant attention
and the rest struggling to raise meaningful
capital. This environment is leading some
market observers to speculate that the
“growth at all cost” mantra of 2014–2015
could return if top-tier companies accept
bigger cash infusions than may be
necessary.
Competition across the late stage
It’s likely competition for late-stage deals
will intensify. The size and scale of these
funds often limit their ability to invest in
early-stage companies, which could drive
even more capital to chase existing or near-
unicorns.
The money is flowing from many sources:
Venture-backed companies raised 2.5x
the amount that their venture firm
counterparts received in commitments
in 2017. The threat of disruption and
mounting piles of cash are driving
corporate venture activity. Despite
rate hikes, mutual fund and hedge fund
managers are reaching for growth once
again. And now even sovereign wealth
funds, some of which are doing direct
investments, see the potential for extended
time horizon.
Impact on the public markets
These mega-rounds often arrive at the
stage when a company would consider an
IPO to raise cash—but now they can delay
it. Many of these mega-rounds provide
secondary liquidity in addition to primary
growth capital. The companies that are
eyeing the public markets in most cases are
more mature. Public asset managers should
even be mindful of an adverse selection
for companies choosing public capital in an
environment of abundant private cash.
In the long run, it is challenging for public
investors when private markets capture
the majority of company value. Between
2013 and 2015, we saw funds reach for
growth with mixed results and longer-than-
anticipated holding periods. Perhaps this
time we’ll see patience on the part of these
investors.
We live in interesting times, and it is still
unclear how significantly the mega-funds
will impact traditional investment patterns.
Investors who have been investing in
disruption may be disrupted themselves.
Steven Pipp, CFA, Research Manager, Silicon Valley Bank
US VC mega-deal activity
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$18.8$24.6$23.1$25.1$22.285
110
74
106
93
2014
2015
2016
2017
2018*
Deal Value ($B)
# of Deals Closed
West Coast nears $17B in 2Q value
2Q US VC deal activity by region
Deal value remains concentrated on coasts
2Q 2018 US VC deal activity by region
PitchBook-NVCA Venture Monitor
New York sees growing share of deals
Percentage of total US VC deal count for select MSAs
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
West Coast
40.4% of 2Q Deals
62.0% of 2Q Deal Value
Mountain
6.2% of 2Q Deals
3.0% of 2Q Deal Value
Midwest
1.4% of 2Q Deals
0.3% of 2Q Deal Value
Great Lakes
7.9%of 2Q Deals
3.4% of 2Q Deal Value
Mid-Atlantic
20.6% of 2Q Deals
13.3% of 2Q Deal Value
New England
9.8% of 2Q Deals
12.3% of 2Q Deal Value
Southeast
6.5% of 2Q Deals
3.2% of 2Q Deal Value
South
7.0% of 2Q Deals
2.5% of 2Q Deal Value
17.5%
18.7%
11.4%
12.8%
7.1%
8.3%
5.9%
6.6%
7.2%
6.0%
0%
5%
10%
15%
20%
25%
2014
2015
2016
2017
2018*
San Francisco
New York
Boston
San Jose
Los Angeles
Region
Deal Count
Deal Value ($M)
Great Lakes
146
918.2
Mid-Atlantic
383
3,617.5
Midwest
26
72.7
Mountain
116
807.5
New England
182
3,361.3
South
130
694.3
Southeast
121
886.5
West Coast
751
16,912.8
13
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Activity by region
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15
2Q 2018 PITCHBOOK-NVCA 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
Software has dominated deal count
US VC activity (#) by sector
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
20082009201020112012201320142015201620172018*Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
Pharma & biotech seeing growth in value
US VC activity ($B) by sector
1,6731,4471,8652,6183,1913,8444,4454,2053,5903,4461,6640%
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*Software Deal Count
Software as % of Total US VC (#)
Software mirrors overall VC trends
Software as % of total VC (#)
$9.9$7.3$8.3$15.1$13.5$16.2$31.2$31.8$36.5$30.0$23.70%
10%
20%
30%
40%
50%
60%
$0
$5
$10
$15
$20
$25
$30
$35
$40
20082009201020112012201320142015201620172018*Software Deal Value ($B)
Software as % of Total US VC ($)
Over 40% of deal value goes to software
Software as % of total VC ($)
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
16
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Life sciences
Activity in life sciences sees strong growth
US VC activity in life sciences
13.3%
14.3%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Sector capturing larger share of deals
US VC activity (#) in life sciences as percent of total VC
Deal count split between the two sectors
US VC activity in life sciences (#) by sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
Following trend, deal sizes getting larger
US VC activity in life sciences (#) by size
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
0
200
400
600
800
1,000
1,200
1,400
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Pharma & Biotech
HC Devices & Supplies
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$9.3$7.9$7.7$8.6$8.7$9.7$12.4$14.7$12.5$17.2$12.60
200
400
600
800
1,000
1,200
1,400
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
20082009201020112012201320142015201620172018*Deal Value ($B)
# of Deals Closed
17
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Life science investing is through the
stratosphere. Why now?
We have the privilege of living through a
renaissance in the life science sector—a
time where the word “cure” will increasingly
replace the word “treatment” in a number
of indications. There is no single factor
driving the current momentum, and what
is often forgotten is that some of the
most transformative innovations (whether
CRISPR or CAR-T) leveraged decades of
advances across the landscape and relied
on largely uncelebrated research quietly
conducted in both academia and industry.
What is unique today is that we increasingly
have new research tools and analytical
capabilities, including the nascent entry
of artificial intelligence (AI) and machine
learning (ML) to help us understand the
true biology behind disease. Sequencing
has certainly played a big role, as the cost
per gigabyte of data has plummeted over
the past decade. But sequencing is not the
whole story—it may tell us where to go, but
other innovations are giving us something
to do once we get there.
Clinical breakthroughs are benefiting
patients and investors alike, leading to
increased capital in the sector and more
entrepreneurs willing to challenge the
realm of the possible. The torrid pace
of investing and company formation
in 2017 resulted in $9.1 billion raised
by venture capitalists and $17.3 billion
in VC investment across the healthcare
sector. Healthcare venture fundraising
in 2018 is on pace to closely match 2017,
and investments likely will surpass last
year’s total. This activity combined with
a collaborative FDA environment (2017
marked a 21-year high for novel drug
approvals at 46, and another 16 have won
approval in the first half of 2018) is making
for a very favorable climate for innovation
and continuing to draw capital into the
sector.
What is driving the wave of biopharma
IPOs?
Beginning in 2014, we saw a pronounced
increase in buy-side institutional appetite
for life science companies in the public
markets, with the number of venture-
backed biopharma IPOs more than
doubling. A number of life science and
healthcare venture firms realized portfolio
returns, helping establish the foundation
for strong fundraising in the years that
followed. Drawn to healthy returns,
crossover investors (public investors
investing in the last private round before an
IPO) have played an increasingly dominant
role in the public market story. Already, 30
biopharma IPOs have priced in the first half
of 2018.
How long will it last?
Without question, the economy will have
its ups and downs, IPO windows will open
and close, and there will be no shortage of
factors that could lead to exogenous shocks
to the market. If you step back, though,
you realize that the innovations taking
place today go well beyond short-term
markets; they are going to change how
disease is treated for generations to come.
In the history of humanity, we are the first
generation to understand the structure of
DNA. Just 15 years ago, we sequenced the
genome; and just five years ago, we learned
how to rewrite it. We are living through the
first generation of gene/cell therapy drugs
(Biogen’s Spinraza, Sarepta’s Exondys 51,
Novartis’ and Gilead’s CAR-T therapies and
Spark’s Luxturna, to name a few). These
new therapeutic platforms may bring with
them a resilience that over the longer term
will be less susceptible to yield curves and
market volatility.
Give us a preview of the most exciting
advancements across the sector.
Areas like AI and ML are early in their
healthcare journey. Their promise of
amplifying the crowd’s wisdom will have
profound applications in drug discovery, in
delivery of care and eventually in creating
a more sustainable health economic model.
Research boom in life sciences benefiting
patients and investors alike
Q&A with David M. Sabow, Group Head of Life Sciences, Client Funds and Bank Products, Silicon Valley Bank
The life sciences sector has grown immensely in the US, with deal value topping $17 billion during 2017, with more than $12.5 billion invested already
this year (21.4% of total US VC deal value). Not only has this investment helped these companies reach private valuations never before seen in
this industry, but research capabilities have been greatly increased. New technologies, especially those common among other VC-heavy industries
(artificial intelligence, machine learning, etc.) are helping researchers and academics make ground-breaking discoveries at breakneck speed. In this
edition, we talked to David M. Sabow, Group Head of Life Sciences, Client Funds and Bank Products at Silicon Valley Bank about how he sees
investment in life sciences playing out, and what’s next for the industry.
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).
18
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
On the biopharma side, we will see off-
the-shelf cell therapies replace the current
autologous first generation CAR-T. We will
also see new treatments in the incredibly
difficult neurodegenerative space—
expanding our understanding of these
indications and using novel approaches that
lead to synaptic regeneration. Profound
advances in data analytics, biomarker
discovery, remote patient monitoring,
diagnostics for earlier intervention and the
delivery of care are just a handful of the
factors converging to drive the industry
forward.
On the investing side, increasingly we
will see novel corporate structures
designed to build a portfolio of assets with
low-correlation risk in early-stage drug
development. With incredible advances
in understanding the specific mechanisms
behind disease, there is a higher probability
of clinical success and by extension a more
predictable return for investors. Imagine
a time when each 401(k) had a portion
allocated to early-stage drug development—
that may be exactly where we are headed.
Which life science subsectors are getting a
lot of interest, and which are underfunded?
Oncology is advancing faster than ever,
driven by cellular therapies, immuno-
oncology and a focus on the heterogeneity
of disease, leading to more-effective
personalized treatment. In 2016 and
2017, oncology received twice as much
investment compared with the next closest
indication. And this may not correct
anytime soon, as these investors have been
well-rewarded, with oncology providing a
large share of life science big exits. A key
opportunity for the industry is to apply
the lessons and advances of the oncology
revolution to other challenging areas such
as neurodegenerative diseases.
Diagnostics and tools companies continue
to see a flood of capital, notably from
technology investors, with a plethora
of private $100 million+ equity rounds
since 2015. There are some exciting
advancements, including new tools for
synthetic biology, AI and ML for diagnostics
and clinical decision-making and, of course,
the promise of liquid biopsy for earlier
intervention and better monitoring.
The device sector has been nearly absent
from the IPO bonanza and is receiving
significantly less than half of the venture
investment we are seeing in biopharma.
Despite this, the sector has experienced a
stable M&A market over the past several
years. Truly innovative device companies
(De Novo 510(k) and premarket approval
pathways) have realized upfront M&A
returns on par with biopharma and three
neuro-focused companies went public in
the first half of 2018. Longer term, the
device subsector will benefit from the
convergence of technology, leveraging
microelectronics, digital health platforms
and patient engagement tools to eliminate
the use of drugs in a number of chronic
conditions.
SVB co-hosts a China healthcare summit
each September in Shanghai. Tell us how
the life science climate is changing there.
Healthcare executives on both sides
of the Pacific now recognize that being
conversant in the Sino/US opportunity is
a strategic imperative rather than merely
good cocktail fodder. There are several
drivers behind this trend. At the highest
level, the vastly different healthcare
challenges facing the US and China pose
a unique opportunity for collaboration.
While the US is focused on reducing
healthcare costs from the whopping 17.5%
of gross domestic product, China is poised
to significantly increase its healthcare
spending from current levels of 6.2% of
GDP. Getting the health economics model
wrong would be magnified exponentially
across China’s huge population. By focusing
on consumer engagement in wellness
for disease prevention, investing in early
disease detection and closely monitoring
the cost of treatments and medical devices,
the Chinese government seems determined
not to follow the same path that led to the
economic challenges of the US healthcare
system.
China is also at the front end of a market
transition, evolving from “Made in China”
to “Created in China.” Economic (a growing
middle class) and demographic (a surge
in aging population) drivers are fueling
the demand for innovative healthcare
products and solutions to address the
increased incidence of disease, including
cancer, hypertension, diabetes, and
cardiovascular and respiratory diseases.
Lastly, Chinese corporates are increasingly
using innovation and deal-making to make
up for the legacy innovation gap. Domestic
Chinese pharma companies spend a mere
approximate 2% to 4% of their total sales
on research and development, compared
with closer to 15% for multinational
companies. This gap is poised to narrow
as select corporates move from lower-
margin generics in favor of higher-margin
innovative therapies.
David Sabow serves as the head of Silicon Valley Bank’s life science and healthcare
practice, as well as the group head for the Bank’s client funds and products
businesses. David manages life science and healthcare deal teams across the
country, is responsible for the Bank’s on and off balance sheet deposit strategy
and is the executive lead for the Bank’s products. David frequently presents at
global industry conferences, has been a guest lecturer at Northeastern University’s
Nanomedicine Graduate program, and has been published in Forbes for his insight
on trends impacting China’s life science and healthcare market.
Prior to joining SVB, David spent nine years in the life science investment
banking practice at Canaccord Genuity, where he participated in public
financings and M&A transactions. While at Canaccord, David worked on both
domestic and international transactions across the spectrum of life science and
healthcare. Outside of work David is the co-chair of the Kelly Brush Foundation’s
Inspire!Boston event, and is a member of the Board of Advisors for Beth Israel
Deaconess Hospital—Needham. David completed the executive program at
Dartmouth’s Tuck School, focusing on Leadership and Strategic Impact. He
graduated with distinction from Santa Clara University and lives in Needham,
Massachusetts.
©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. 06.22.18
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
Helping life science and
healthcare innovators
move bold ideas forward, fast.
CVC participation in venture deals has
continued at a brisk pace in 2Q, with total
deal value topping $13.5 billion, only
slowing slightly from the pace in 1Q. CVC
activity is in line with the broader VC trend
of capital concentration exhibited through
declining deal count and increasing deal
size. Although total deal value is up 104%
YoY, deal count is down 4%.
For the past five years, CVCs have steadily
invested in fewer deals smaller than $5
million and shifted toward larger check
sizes, increasing participation in deals
sized over $25 million. Additionally, nearly
20% of CVC deals (by count) are invested
in rounds sized $50 million or greater. As
corporations have adapted to increasing
competition from agile startups, they
have become more willing to engage
with those startups directly, whether
through partnerships, acquisitions or CVC
investments. As corporations become more
comfortable using VC as a tool to promote
innovation and enhance competitive
advantage, we expect to see continued
participation by CVCs in large rounds.
The software and life sciences sectors
continue to receive increased focus from
CVCs. Together, software and life sciences
have received 62% of CVC deal count YTD.
These sectors have increased steadily from
46% of deal activity a decade ago. We
expect this trend to continue as established
healthcare and biotech firms see VC as a
viable means of engendering innovation
and new product development. VSP Global,
a vision care health insurance company,
recently invested in NeuroVision Imaging,
a startup developing technology to detect
Alzheimer’s Disease. The investment
furthers VSP’s mission of highlighting “the
critical role the eye doctor plays within an
20
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Corporate VC
CVC pacing for record year
US corporate VC participation activity
45.2%
48.3%
15.8%
17.6%
0%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
CVC % of VC Deal Value
CVC % of VC Deal Count
CVC participating in 50% of deal value
Percentage of activity that includes CVC participation
238
105
663
327
496
273
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Angel/Seed
Early VC
Late VC
CVC activity balanced across stages
CVC investment activity (#) by stage
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$10.3$6.6$8.0$13.5$12.2$15.2$27.6$37.2$35.3$37.0$27.8702
501
574
738
868
1,095
1,352
1,478
1,376
1,397
705
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
increasingly integrated healthcare system.”
An active CVC strategy allows healthcare
and biotech firms to further innovation
objectives and reduce R&D costs
significantly by focusing time and capital
on funding technologies that have shown
positive medical results.
One important contributing factor that
can help to sustain the rise in CVC is the
passage of US tax reform in late December
of 2017. The reform will impact companies
in several ways. First, a reduction in the US
corporate tax rate from 35% to 21% will
be a boon for firms’ free cash flow (FCF),
providing corporations with additional
capital to direct into CVC investments.
Indeed, just six months after tax reform was
enacted, we are now seeing firms such as
Lockheed Martin publicly cite tax reform in
press releases in regards to increased CVC
activities. Lockheed responded to the tax
reform by increasing dedicated CVC capital
by $100 million. The firm’s most recent
investment was into Mythic, a local artificial
intelligence platform. Cash repatriation
presents an additional opportunity for
CVC participation. New tax policies reduce
penalties for repatriating earnings, freeing
up cash to be invested in VC. Going
forward, we expect corporate R&D spend
and investment to accelerate in anticipation
of future tax savings.
21
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Large deals account for higher count
US corporate VC activity (#) by deal size
CVC present in many of largest deals
US corporate VC activity ($) by deal size
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 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%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
0
200
400
600
800
1,000
1,200
1,400
1,600
20082009201020112012201320142015201620172018*Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
Software hits plateau over recent years
US corporate VC activity (#) by sector
Software deal value has declined
US corporate VC activity ($B) by sector
$0
$5
$10
$15
$20
$25
$30
$35
$40
20082009201020112012201320142015201620172018*Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
22
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
It’s undeniable that the US venture
industry has evolved, maybe more so
in the past several years than during
any time previously. In the past, a $100
billion investment fund providing late-
stage capital was unthinkable, and capital
was provided by fewer sources, limiting
potential conflicts of interest between
investor types. These days, however, there
is more private capital available than ever,
and companies are continuing growth
much longer than before, postponing even
the thought of an exit. These changes call
for adaption from all sides, and, for those in
a consultative relationship to the industry,
an everchanging storyline of advice that
can be modified to fit not only the shifting
environment, but also the evolving role
of companies and technologies within the
market.
Consultative relationships should begin at
the very earliest stages of venture when
the near-term decisions have the greatest
effect on long-term direction of the
company. Cultivating this relationship with
trusted service providers can be essential in
helping navigate the current environment.
Before the industry was as crowded with
entrepreneurs and investors as it is today,
raising initial capital was a less arduous
task, with just three main sources of capital:
friends and family, angels, and the more
traditional early-stage venture investors.
These sources offered entrepreneurs with
plenty of opportunity to raise relatively
simple capital, largely limiting complicated
deal terms and offering entrepreneurs
the chance to hold onto large amounts of
their company. Today, there has been a
trifurcation of the early stage leading to
distinct phases—pre-seed, seed and Series
A. Much of this is due to incoming investor
types causing early capital raising to appear
differently than in the past.
It is not uncommon now for companies
entering seed or Series A to have already
raised millions. To go along with the
traditional capital sources, accelerators
have exploded within the industry to fund
nascent ideas and burgeoning startups.
Family investment offices, too, have crept
into earlier investments looking to maintain
and grow their wealth while adding fuel
to the fire of young startups. While each
of these are great sources for capital and
mentorship, the addition of more investors
and larger amounts of capital so early in
the company’s lifecycle can complicate the
structure of the cap table down the line,
especially if protective terms or first rights
provisions are included in deals early on in
the company’s lifecycle. The caution with
adding several different types of investors
is simply to make sure that all interests
are aligned for the company. Conflicts can
arise down the line, complicating an exit or
adding difficulty to raising further capital.
Buddy Arnheim, Partner, Emerging Companies and Venture Capital, Perkins Coie
An evolving VC market needs evolving
participants
Median deal sizes continue upward guidance
Median deal size ($M) by series
With more than 1,000 lawyers in 19 offices across the United States and Asia, Perkins Coie represents great companies across a wide range of industries
and stages of growth—from startups to FORTUNE 50 corporations. Attorneys in our Emerging Companies and Venture Capital practice offer one of the
premier legal resources in the nation for venture-backed companies that have IP as a key value driver. Our clients turn to us for guidance on company
formation, IP protection and enforcement, financings, corporate governance, technology transactions, product counsel, and mergers and acquisitions, to
name a few of the legal areas on which we focus. We also represent investors as they make, manage and divest investments in diverse industries. Learn
more at perkinscoie.com and startuppercolator.com.
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$1.6
$2.1
$6.0
$8.0
$14.0
$16.5
$22.0
$27.0
$32.1
$50.0
$0
$10
$20
$30
$40
$50
$60
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Seed
Series A
Series B
Series C
Series D+
23
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Perkins Coie LLP Attorney Advertising
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LEARNING AND ROBOTICS
Let’s chat
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OUR EMERGING COMPANIES
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To learn more, visit
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The growth of the early stage has sent a
relative shockwave effect through the
rest of the venture lifecycle. For one,
more is expected of companies to receive
investment. Many early-stage companies
now have revenues to show investors and
a more scalable business model, earlier on
in their development than in the past. A
correct pathway to success is now more
important than ever, and early success can
make or break even the best ideas and
technologies.
Beyond capital financing, the lengthening
time to exit poses more challenges for
companies with venture backing. This, too,
may be the most important area in which
advice from outside providers in a close
relationship should be sought. Though
the IPO window is “open,” tech companies
are not turning toward an IPO until much
later into their lifecycles. The illiquidity
of compensation tied to employment has
become a major hazard in retaining talent.
Within major tech areas, a battle has begun
against attrition, as employees move
through mid-management at late-stage
companies to more attractive option plans
or seek a higher title at a younger tech
startup. Liquidity is a growing struggle,
with fewer companies than ever before
completing an IPO at a valuation less than
$500 million and, in turn, spending much
more time growing privately. Finding
liquidity for employees and early investors
can take away from the longer-term vision
of the company, straining already thinly
spread time from c-level employees. But
retaining top talent can be essential to
bring the collective vision of leadership to
fruition. The reason companies have been
able to delay potential exits is simple. The
amount of capital available for late-stage
deals is higher than it has ever been. Public
investors have helped to fill the needs of
these growth companies at the top end of
the market by simply getting into private
deals at the time of the company’s lifecycle
during which companies would have more
traditionally entered the public market.
Many early-stage companies now have
revenues and a more scalable business
model to show investors earlier on in
their development than in the past.
Consultative advice from service providers
that have facilitated deals in the changing
environment are an essential source for
advice and strategic planning. Outside
advice and consultation can relieve some of
the pressures facing startups in this ever-
changing industry. Piloting a young startup
or even a seasoned late-stage company is
difficult and shouldn’t be burdened by a
single executive or small team.
Exit timelines remain lengthened for all exit types
Average time to exit (years) by type
5.9
5.6
6.9
6.3
7.7
7.4
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Acquisition
IPO
Buyout
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
24
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Growth equity
$8.0$5.6$5.1$4.8$4.2$5.2$8.5$3.9$6.8$4.4$5.5$4.7$8.9$11.3$8.4$11.0$11.3$10.2$12.8$9.5$11.2$13.3$6.1$8.5$6.4$11.8$15.1$9.3$15.6$12.10
50
100
150
200
250
300
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
Capital available to companies at the latest stages
US growth equity activity
2018 set for record year after two large quarters
US growth equity activity
PitchBook-NVCA Venture Monitor
$19.2$10.9$18.4$23.5$21.8$21.4$39.5$43.7$39.2$42.7$27.7567
386
528
614
641
639
851
924
806
872
526
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
Growth equity, an interesting hybrid of PE
and VC, has become a much more crowded
space. With a steady stream of more
mature companies flowing through the
private markets, non-VCs like corporations,
PE firms and other institutional investors
are seeking to access the growth potential
that these large private companies often
promise. In the second quarter, growth
equity participation represented $12.1
billion of capital invested, coming in higher
than the five-year average for capital
invested and continuing the strength
from 1Q. This uptick in growth activity
has paralleled increased buyout activity of
VC-backed businesses, as PE firms look
to source enough deals to deploy the
mountains of dry powder that have built up
over the past decade.
The ability of this stage to finance mega-
rounds has blossomed in the last few years,
and with fundraising sitting at historically
high levels and the dry powder build-up,
this trend will likely survive for years to
come. This has also meant that private
markets have become a viable alternative
to the public markets’ financing function.
This can be seen by the amount of capital
invested into the growth stage and by
the amount of $100 million+ deals—the
historic fundraising milestone at which
point companies would’ve looked to public
market investors. Through the first half of
2018, we have recorded 65 deals of this
size, which represents 75% of the 2017
full-year total and exceeds 2016’s total
of 60 deals.
25
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
$40.0
$45.0
$158.2
$180.0
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Median Deal Size ($M)
Median Pre-money Valuation ($M)
Not shying away from high valuations
Median growth equity deal size and pre-money valuation ($M)
Sector trends remain stable
US growth equity activity ($) by sector
22% of deals above $100M
US growth equity activity (#) by size
Deals of $200M+ represent 37% of value
US growth equity activity ($) by size
Growth equity pacing for record
year in both deal count and deal
value in the US
Growth equity investors have
been a major reason that
companies are able to stay
private longer before an exit
0
100
200
300
400
500
600
700
800
900
1,000
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 June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
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 June 30, 2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$200M+
$100M-
$200M
$75M-
$100M
$50M-
$75M
$30M-
$50M
$15M-
$30M
26
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Nontraditional investors, family offices
seek earlier-stage deals
The rush of nontraditional VCs into the
innovation economy is creating new
paradigms for earlier-stage investing. Since
the financial crisis, we have seen enormous
growth in invested capital by these
investors, notably, family offices, sovereign
wealth funds and mutual funds.
These nontraditional investors want not
only access to the best companies but
also a front row seat to innovation and
the entrepreneurs who are shaping the
future. The value-add from each group
varies as well. For example, mutual funds
are sophisticated investors that can help
position a company for a potential IPO.
Family offices often have entrepreneurial
DNA and can provide patient capital that
scales with founders and venture firms over
the long-term. Sovereign funds often look
to diversify their economies and hopefully
bring innovation back to their home
country.
Spurred by rising valuations and growing
investor sophistication, nontraditional
investors are investing at earlier stages.
Many mutual funds, which typically
invested post-IPO, now see that significant
value can be realized when the company is
still private.
Series D+ still captures the most activity
in terms of capital and deal count by
nontraditional investors, but Series B deal
counts are seeing the fastest growth since
2016, increasing 35%. Interest in the seed
stage has also grown, and now 16% of seed
deals involve a nontraditional investor, a
15% increase since 2016. Angel & seed
investments are larger than ever and have
been buoyed by abundant capital as these
investors are looking to invest in high-
growth technology companies. The growth
of nontraditional investments is helping to
dramatically change the startup fundraising
timeline.
The rise of the family office
One type of investor making waves at
the earlier end of the spectrum is the
family office. Family offices are not new
to venture. In fact, they backed some of
Silicon Valley’s early venture pioneers.
Their impact on the early-stage ecosystem,
though, has never been greater. Half of all
the family offices in the world have been
created in the past 15 years, and many of
those families want access to innovation,
technology and emerging managers. As
their appetite for VC grows, family office
managers are seeking new strategies,
including both making direct investments
and building relationships with emerging
managers to gain insight and access to
technology deals. These managers help
family offices navigate the market and
can introduce them to direct investment
opportunities that have already been
scrubbed by the VCs. Family offices are also
starting to follow in the footsteps of large
institutional investors, focusing on building
long-term partnerships with managers and
evaluating investment performance across
multiple funds.
Direct VC/PE or co-investing makes
up 13.2% of the typical family office
portfolio, according to the Global Family
Office Report 2017, and almost 70% of
family offices engage in direct investing. A
majority of family office money invested
in recent years has been funneled toward
IT, with more than 97% of this investment
in the software space. Family offices also
have been involved in notable late-stage
VC deals in recent years, including Uber,
Robinhood, Adyen and Instacart.
What does the future look like for
family offices and other nontraditional
investors? They are becoming increasingly
institutionalized as they build better
processes for evaluating companies and
funds to leverage for their unique value-
add. They are hiring connected people who
have networks and experience in private
company investing, and their continued
growth and participation in the innovation
economy is providing another source
of capital to help tech and life science
companies invent the future.
Jim Marshall, Head of Emerging Manager Practice, Silicon Valley Bank
14.0%
16.7%
23.9%
28.1%
35.0%
41.8%
42.7%
43.8%
49.3%
60.4%
0%
10%
20%
30%
40%
50%
60%
70%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Seed
Series A
Series B
Series C
Series D+
Over 60% of US Series D+ deals include nontraditionals
Percentage of overall US VC activity with nontraditional investor participation by series
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
27
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Exits
$8.7$8.8$7.8$8.6$6.9$17.0$11.7$10.4$3.8$8.8$11.2$13.0$13.7$11.2$18.3$36.7$8.6$10.1$16.5$15.2$17.1$16.7$16.0$9.4$15.9$12.7$12.4$12.9$15.7$12.90
50
100
150
200
250
300
350
$0
$5
$10
$15
$20
$25
$30
$35
$40
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2011
2012
2013
2014
2015
2016
2017
2018
Exit Value ($B)
# of Exits Closed
$16.2$16.3$30.6$33.8$46.0$36.8$79.8$50.4$59.2$54.0$28.7484 482
697
738
869
893
1,073
1,012
879
853
419
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Exit Value ($B)
# of Exits Closed
Exit value strong as activity stabilizes
US VC-backed exit activity
12 of past 13 quarters have realized over $10B in exit value
US VC-backed exit activity
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
As hold times and valuations continue to
extend across the board, the health of the
exit market grows in importance. So far in
2018, we’ve seen some encouraging signs
with a strong first half of exit value and
steady valuation step-ups at exit. With
$28.7 billion of exit value closed through
the first six months, 2018 is pacing to top
$50 billion for the fifth straight year.
IPOs have been a bright spot in the exit
market, with activity primed to closely
match last year’s levels on both a count and
value basis. This quarter was headlined by
eight companies debuting at a valuation
over $1 billion, with DocuSign and
Pluralsight topping that list. At least one
highly anticipated IPO was scrapped, with
Adaptive Insights purchased by Workday
for $1.55 billion—more than double the
$627 million at which they were planning
to price the IPO. This complemented some
of the high-profile IPOs that capped off an
exceptionally strong quarter for enterprise
software exits, which we expect to, in turn,
drive increased deal activity in the space as
that capital is re-allocated.
While pharma & biotech IPO activity
usually makes up a majority of the IPO
count, the industry had an especially robust
June with 15 companies pricing, including
a record of 6 on a single day. Recent
strength in the public markets and investor
familiarity with the biotech business model
has pushed the IPO window wide open,
and VC-backed companies are taking
advantage of the opportunity. In turn,
this could spur more activity by corporate
acquirers as they might look to pull the
trigger and acquire a company before they
have a chance for a public listing to avoid
paying a premium on their public shares.
Corporate acquirers also have tailwinds
from the recent passage of tax reform
legislation, which we expect to lead to an
28
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*Acquisition
IPO
Buyout
Buyouts still growing
US VC-backed exit (#) by type
Exit sizes among all types grow
Median US VC-backed exit size ($M) by type
Over 50% of exits above $100M
US VC-backed exit activity (#) by size
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$83.0
$95.0
$76.0
$108.0
$125.0
$162.5
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Acquisition
IPO
Buyout
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
Exits under $50M represent <10% of value
US VC-backed exit activity ($) by size
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
uptick in M&A transactions in the short-
term.
Alternative exits, particularly direct
secondary transactions and special purpose
acquisition companies (SPACs), are areas
we expected to see have increased
activity throughout 2018 and beyond.
In June, we saw TPG announce its new
Tech Adjacencies Fund, which is seeking
$1.5 billion to target direct secondary
opportunities, expanding its growth stage
strategy into new areas. This trend is
predicated on the fact that companies are
raising a larger number of VC financings
and delaying exits, as VC capital availability
allows rounds at virtually any amount.
While there have been some encouraging
signs from the IPO market, the costs of
operating as a public company still loom
as deterrents for many large VC-backed
companies. The second quarter contained
both Spotify’s unorthodox public listing as
well as a few more SPAC debuts, providing
further evidence that alternatives are likely
here to stay and even more likely to evolve
over the coming years as the current market
cycle plays out.
29
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Fundraising
$31.7$12.1$19.8$25.7$24.4$21.1$36.2$36.8$41.1$34.6$20.2193
124
156
155
208
227
297
295
322
283
157
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Capital Raised ($B)
# of Funds Closed
Contrary to belief, fundraising shows no sign of slowing
US VC fundraising activity
Fund sizes trending larger
US fundraising activity (#) by size
Median fund size reaches 10-year high
Median and average fund size ($M)
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
After a slow start to fundraising in 2018,
2Q saw an uptick in activity. VCs closed
72 funds with a total of $10.8 billion raised
during the quarter. This brings both fund
count and capital raised in 2018 on pace to
surpass 2017 totals. The number of micro-
funds (funds sized $50 million or smaller)
has declined slightly in 2018, but we expect
this category to rebound in the second
half of the year as a number of open funds
approach their target sizes. In the $100
million-$500 million range, capital raised
has increased at a faster pace than other
segments. Successful closings of funds in
this bucket have increased from 40% of
total capital raised in 2014 to 56% in 2018.
This trend likely ties to elevated valuations
of seed-stage startups, driving VCs to raise
larger funds. According to recent PitchBook
analysis, larger funds have proven to
provide greater returns. These market
factors, in addition to outsized returns, are
providing sufficient incentive for LPs to
continue to support VCs as they raise ever
larger funds.
The seed-stage ecosystem has gone
through significant transformations over
the past several years. Whereas seed
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
$65.0
$134.5
$141.0
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Median
Average
investments were initially made into
startups at the earliest lifecycle stages,
the “seed” label has evolved to include
companies that have achieved impressive
levels of traction and product development.
The potential for high returns has attracted
numerous new investors, including angels,
CVCs and VC funds. With rising deal sizes
and valuations, some seed-stage VCs have
been faced with a dilemma: Do they raise
larger funds to stay competitive, or do they
exit the seed market entirely? LVRHealth,
30
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
First-time funds keep good times rolling in 1H
US first-time fundraising activity
Micro-funds pacing for record value
US micro fundraising activity
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
after raising four sub-$20 million funds,
decided to raise a fifth fund at $100 million.
Arena Ventures has chosen the latter
option, pausing seed investing activities
“until the seed market corrects.” We expect
inflated valuations and larger seed funds
to continue as greater amounts of capital
continue to be directed into early-stage
companies.
Another significant trend is the decrease
in mega-funds ($1 billion+) raised. Total
mega-fund funding has declined from
$11.4 billion in 2014 to $6.8 billion in
2017. Thus far, 2018 appears to be in
line with previous years; however, seven
open mega-funds could reverse this trend.
Serpent Venture Capital is raising the
largest fund, with a minimum fund size of
$7 billion. If all seven vehicles close this
year, it would bring total mega-fund capital
closed in 2018 to a new high of $23.28
billion. The rise in mega-funds is providing
a much-needed destination for the plentiful
LP capital available in the market. Elevated
aggregate distributions to LPs and positive
aggregate net cash flows are driving
larger investments. The capacity to write
large checks will exacerbate the trend of
unicorns retaining private status for longer.
Lastly, we believe many of these funds are
taking an approach similar to SoftBank’s
Vision Fund, adopting a meta-view and
attempting to capitalize on mega-trends
affecting entire industries.
$3.1$1.1$0.7$1.9$1.6$1.5$1.9$2.3$2.5$3.8$1.80
10
20
30
40
50
60
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
$3.5
$4.0
$4.5
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
Capital Raised ($B)
# of Funds Closed
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
$1.2$0.8$1.1$1.2$1.6$1.8$1.9$1.7$2.0$2.0$1.10
20
40
60
80
100
120
140
160
180
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
Capital Raised ($B)
# of Funds Closed
1.2x
1.0x 1.0x
1.1x
1.2x
1.2x
1.2x
1.3x
1.2x
1.4x 1.4x
0.0x
0.2x
0.4x
0.6x
0.8x
1.0x
1.2x
1.4x
1.6x
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Firms raising larger follow-on funds
Median US VC follow-on fundraising step-up multiples
Follow-on fund pace slowing slightly
Median time (years) between funds
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
3.6
3.8
3.7
3.5
3.7
3.6
2.8
2.5
2.7
2.7
2.8
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
PitchBook-NVCA Venture Monitor
*As of June 30, 2018
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32
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
2Q league tables
Plug and Play Tech Center
25
SOSV
17
Alumni Ventures Group
12
Innovation Works
11
Founder Collective
7
Slow Ventures
7
Social Capital
7
True Ventures
7
Astia Angels
6
Founders Fund
6
Abstract Ventures
5
Right Side Capital Management
5
Sinai Ventures
5
Y Combinator
5
8VC
4
Capital Factory
4
ChinaRock Capital Management
4
Foundation Capital
4
Hyde Park Venture Partners
4
Keiretsu Capital
4
Kickstart Seed Fund
4
LaunchCapital
4
Liquid 2 Ventures
4
M25
4
Precursor Capital
4
Princeton Alumni Entrepreneurs
Fund
4
Rockies Venture Club
4
Social Starts
4
SV Angel
4
Most active investors
angel/seed
Most active investors
early stage
Most active investors
late stage
SOSV
17
Plug and Play Tech Center
16
Kleiner Perkins Caufield & Byers
14
New Enterprise Associates
12
Alumni Ventures Group
11
Founders Fund
10
General Catalyst
10
Andreessen Horowitz
8
First Round Capital
8
GV
8
Intel Capital
8
Lux Capital
8
Y Combinator
8
Canaan Partners
7
Elevate Ventures
7
Greycroft
7
Keiretsu Forum
7
Khosla Ventures
7
RRE Ventures
7
ARCH Venture Partners
6
Invest Michigan
6
Lightspeed Venture Partners
6
Social Capital
6
SV Angel
6
True Ventures
6
Upfront Ventures
6
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
Kleiner Perkins Caufield & Byers
15
New Enterprise Associates
14
Alumni Ventures Group
12
Andreessen Horowitz
9
Bessemer Venture Partners
9
Accel
8
Menlo Ventures
8
F-Prime Capital Partners
7
General Catalyst
7
GV
7
Intel Capital
7
Sapphire Ventures
7
Venrock
7
Bain Capital Ventures
6
IVP
6
Khosla Ventures
6
Lightspeed Capital Partners
6
Sequoia Capital
6
Battery Ventures
5
Castor Ventures
5
Greylock Partners
5
Charles River Ventures
5
M12
5
Salesforce Ventures
5
Spark Capital
5
SV Health Investors
5
Thrive Capital
5
Upfront Ventures
5
PitchBook-NVCA Venture Monitor
33
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Select largest US VC deals in 2Q 2018
Select largest US VC funds closed in 2Q 2018
Select largest US VC-backed IPOs in 2Q 2018
Select largest US VC-backed acquisitions in 2Q 2018
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
Company
Deal Size ($M)
Series/Stage
Date
HQ
State
Industry
Faraday Future
2,000.0
Corporate
4/20/2018
Los Angeles
CA
Transportation
Lyft
600.0
Series I
6/27/2018
San Francisco
CA
Software
Allogene Therapeutics
411.8
Series A
4/19/2018
South San
Francisco
CA
Pharma & biotech
Robinhood
362.9
Series D
5/10/2018
Palo Alto
CA
Software
Instacart
350.0
Series E
4/5/2018
San Francisco
CA
Software
Opendoor
325.0
Series E
6/13/2018
San Francisco
CA
Software
Grail (Biotechnology)
300.0
Series C
5/21/2018
Menlo Park
CA
Pharma & biotech
Tradeshift
250.0
Series E
5/30/2018
San Francisco
CA
Software
Cohesity
250.0
Series D
6/11/2018
San Jose
CA
Other
Dataminr
$221.1
Series E
6/4/2018
New York
NY
Software
Fund Name
Investor
Fund Size ($M) Date
HQ
State
Foresite Capital Fund IV
Foresite Capital Management
668.0
5/3/2018
San Francisco
CA
8VC Fund II
8VC
640.0
4/24/2018
San Francisco
CA
Meritech Capital Partners VI
Meritech Capital Partners
630.0
6/1/2018
Palo Alto
CA
Charles River Partnership XVII
Charles River Ventures
600.0
5/11/2018
Cambridge
MA
WiL Fund II
WiL (World Innovation Lab)
521.0
6/20/2018
Palo Alto
CA
Matrix Partners XI
Matrix Partners
450.0
6/20/2018
San Francisco
CA
Emergence Capital Partners V
Emergence Capital Partners
435.0
5/21/2018
San Mateo
CA
Redpoint Ventures VII
Redpoint Ventures
400.0
6/19/2018
Menlo Park
CA
Venrock Healthcare Capital Partners III
Venrock
400.0
4/20/2018
New York
NY
Sprout Endurance Partners
SVB Capital
392.0
5/18/2018
Santa Clara
CA
Company
Exit Size ($M)
Exit Post-val ($M) Date
HQ
State
Industry
DocuSign
465.7
4,411.2
4/27/2018
San Francisco
CA
Software
Mercari
496.6
3,701.0
6/19/2018
San Francisco
CA
Software
Pluralsight
310.5
1,979.6
5/17/2018
Farmington
UT
Software
Avalara
180.0
1,559.6
6/15/2018
Seattle
WA
Software
Smartsheet
174.0
1,483.4
4/27/2018
Bellevue
WA
Software
Company
Exit Size ($M)
Acquirer(s)
Date
HQ
State
Industry
Flatiron
1,900.0
Roche (SWX: ROG):
4/6/2018
New York
NY
Healthcare technology
systems
Ring
1,200.0
Amazon (NASDAQ: AMZN)
4/12/2018
Santa Monica
CA
Consumer Products
Glassdoor
1,200.0
Recruit Holdings (TKS: 6098)
6/21/2018
Mill Valley
CA
Media
Kensho
550.0
S&P Global (NYSE: SPGI)
4/9/2018
Cambridge
MA
Software
NxThera
406.0
Boston Scientific (NYSE: BSX)
4/27/2018
Maple Grove
MN
Healthcare devices &
supplies
34
2Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
2Q US VC activity by state &
territory
2Q US VC activity by top
metropolitan statistical areas
State
District
Deal Count
California
12
217
New York
12
102
California
18
83
New York
10
83
Massachusetts
7
75
California
17
48
California
14
43
Washington
7
41
California
33
31
California
13
30
California
52
26
Massachusetts
5
25
Illinois
7
22
Massachusetts
8
22
California
49
20
Colorado
1
20
California
45
18
Texas
21
18
Colorado
2
16
District of
Columbia
15
Washington
9
15
California
19
14
Massachusetts
4
14
Georgia
5
13
North Carolina
1
13
Pennsylvania
14
13
California
15
12
New York
7
12
Texas
10
12
California
37
11
Oregon
3
11
Wisconsin
2
11
2Q US VC activity by top
congressional districts
State
Deal
Count
Deal Value
($M)
California
648
15,604.5
New York
232
2,881.3
Massachusetts
160
3,270.1
Texas
95
617.0
Washington
78
914.5
Colorado
57
466.6
Pennsylvania
53
242.3
Florida
45
108.3
Illinois
38
253.4
North Carolina
38
411.3
Virginia
29
90.9
Georgia
27
339.8
Michigan
27
129.3
Minnesota
27
131.4
Maryland
26
241.1
Oregon
23
392.9
Utah
23
185.6
Wisconsin
22
101.8
Ohio
21
274.2
Tennessee
19
66.9
New Jersey
18
81.1
District of Columbia
15
75.4
Arizona
13
82.2
Indiana
11
28.1
Missouri
11
21.6
Connecticut
10
57.1
Delaware
10
5.4
Nevada
10
40.3
Arkansas
7
3.9
South Carolina
7
13.0
Idaho
6
6.7
Kentucky
6
6.3
New Hampshire
6
20.5
MSA
Deal Count
San Francisco-Oakland-
Fremont, CA
348
New York-Northern New Jersey-
Long Island, NY-NJ-PA
238
Boston-Cambridge-Quincy,
MA-NH
155
San Jose-Sunnyvale-
Santa Clara, CA
123
Los Angeles-Long Beach-
Santa Ana, CA
111
Seattle-Tacoma-Bellevue, WA
72
Washington-Arlington-
Alexandria, DC-VA-MD-WV
50
Austin-Round Rock, TX
48
San Diego-Carlsbad-
San Marcos, CA
48
Chicago-Naperville-
Joliet, IL-IN-WI
36
Denver-Aurora, CO
36
Philadelphia-Camden-
Wilmington, PA-NJ-DE-MD
34
State
Deal
Count
Deal Value
($M)
New Mexico
6
25.2
North Dakota
6
21.0
Alabama
4
14.2
Iowa
4
8.7
Kansas
3
11.3
Rhode Island
3
11.1
Hawaii
2
0.9
Oklahoma
2
0.3
Puerto Rico
2
1.8
Vermont
2
2.2
Louisiana
1
—
Maine
1
0.3
Nebraska
1
9.0
South Dakota
1
1.2
Wyoming
1
1.1
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
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.
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.
35
2Q 2018 PITCHBOOK-NVCA 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
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We will email quarterly surveys to each
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not only power PitchBook-NVCA reports,
but also ensure your firm is represented
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Price deals with confidence using pre- and
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comps, cap tables and series terms.
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in on other firms or strategic acquirers
whose investment preferences match your
portfolio company.
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