1Q 2018
An enormous $28.2B invested
in 1Q, besting the previous
decade high by more than $4B
Page 4
The definitive review of the US venture capital ecosystem covering 1Q and beyond
Though 1Q exits were slow, the
pace is expected to increase as
IPOs heat up and corporations
use tax breaks for acquisitions
Page 26
SoftBank’s Vision Fund has
made a splash. Now VCs are
gearing up for a battle with
mega-funds of their own
Page 29
In partnership with
Credits & Contact
PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Research & Analysis
Content
NIZAR TARHUNI Associate Director, Research &
Analysis
KYLE STANFORD Analyst
CAMERON STANFILL Analyst
JOELLE SOSTHEIM Analyst
MASAUN NELSON 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
BEN VEGHTE Vice President of Communications &
Marketing
Contact NVCA
nvca.org
nvca@nvca.org
Silicon Valley Bank
GREG BECKER Chief Executive Officer
MICHAEL DESCHENEAUX President
TRACY ISACKE Head of Corporate Relationship
Management
BOB BLEE Head of Corporate Finance
MATT TROTTER Managing Director of Hardware
and Frontier Tech

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
CHARLES E. TORRES Partner, Emerging Companies
& Venture Capital

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
JERON PAUL CEO, Capshare

Contact Solium
solium.com
Executive summary
3
Overview
4
Angel/seed
7
First financings
8
Solium: Cap table analytics can provide
transparency to an opaque industry
9
Early-stage VC
10
Late-stage VC
11
Perkins Coie: Key points for client capital needs and
liquidity in today’s venture landscape
12
Activity by region
14
Activity by sector
16
SVB: Advanced manufacturing: Can a cobot help
you with that?
17
Life sciences
18
Corporate VC
19
Q&A: As tech disrupts traditional industries,
corporations boost startup investment
21
Growth equity
23
SVB: What public market fluctuations signal for
venture dealmaking
25
Exits
26
Fundraising
29
1Q league tables
32
Methodology
35
Contents
2
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Executive Summary
3
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
After an active 2017 for investment in US venture-backed companies, momentum in capital deployed continued in the first quarter
of 2018 while the pace of companies receiving capital continued to decelerate. A total of 1,683 venture-backed companies raised
$28.2 billion in funding during 1Q 2018, marking the fourth consecutive quarter of more than $20 billion deployed to venture-backed
companies and the highest amount of capital deployed in a single quarter since at least 2006.
In 1Q, 17 unicorns (i.e., companies valued at $1 billion+) attracted a combined $7.2 billion, over one-quarter of total capital deployed to
venture-backed companies, the second-highest quarterly deal value share we have tracked. This new normal of sustained rise in capital
deployment and fewer completed deals is a continued trend from 2017. Fewer companies receiving funding and at higher valuations
has in turn corresponded with increased median deal sizes across all stages. In 1Q, the median early-stage deal reached $9.2 million and
median late-stage deal reached $15 million, increases of 3.1x and 2.1x, respectively, compared to just five years ago.
Increasing deal sizes across all stages of the company growth cycle can be partly attributed to the sustained momentum in venture capital
fundraising over the last several years, which has resulted in a combined $160 billion raised since 2014, including $7.9 billion raised in 1Q
2018. Norwest Venture Partners’ $1.5 billion fund XIV and General Catalyst’s $1.375 billion fund IX were the largest of the 54 venture
funds holding a final close.
While the total amount of capital raised and number of funds closing in the first quarter—for both new and established firms—was light
compared to recent quarters, several prominent venture firms are currently in the market raising funds with multibillion-dollar targets,
suggesting a pickup in pace as 2018 unfolds. When factoring in these efforts to raise larger venture capital funds, as well as the ever-
increasing role of the $100 billion SoftBank Vision Fund, some investors expect overall investment into venture-backed companies to
reach—and perhaps even surpass—the post-dot-com record from 2017.
In addition to rising expectations for another year of historical investment activity, optimism is also high for a strengthening exit
environment that will bring long-awaited liquidity to venture investors and LPs alike. In the first quarter, there were 144 disclosed
venture-backed M&A transactions, led by Amazon’s $1.2 billion acquisition of smart security device company Ring. While venture-
backed M&A activity was flat compared to the end of 2017, many investors expect the repatriation provision and the lower corporate
rate included in the recently passed tax reform package to provide corporations with additional capital to make strategic acquisitions of
venture-backed companies, which may boost M&A activity in the months ahead.
A strong 4Q 2017 for venture-backed IPOs signaled continued optimism for 2018, which for the most part played out in the first quarter.
In 1Q 2018, there were 15 venture-backed IPOs, led by storage platform Dropbox’s NASDAQ listing on March 23, which raised $756
million at an $8.2 billion valuation. With a recent string of successful enterprise tech IPOs like Dropbox in 2018 and Okta, MongoDB and
Mulesoft in 2017, and a healthy pipeline of venture-backed companies readying for IPOs, some investors believe that 2018 will likely be
the strongest year for IPO activity in recent memory.
Beyond the exit environment, two other areas the industry will continue to closely monitor in 2018 are: 1) the SEC crackdown on initial
coin offerings (ICOs), which surfaced in 2017 as a potential disruptor of the venture investment model; and 2) proposed legislation that
would affect foreign investment into venture funds and startups, which could result in a costly and opaque process and a burden on the
ecosystem.
4
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
$37.0$27.0$31.2$44.6$41.6$47.0$71.4$81.8$75.3$82.9$28.24,707 4,465
5,378
6,734
7,865
9,226
10,467 10,558
8,824
8,652
1,693
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
0
500
1,000
1,500
2,000
2,500
3,000
$0
$5
$10
$15
$20
$25
$30
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018
Deal Value ($B)
# of Deals Closed
Angel/Seed
Early VC
Later VC
Overview
With over $28 billion invested into the
US venture ecosystem, 2018 is pacing to
extend the trends we’ve grown accustomed
to over the last few years of total capital
invested figures soaring to unprecedented
levels. While the top-line count of
completed financings declined significantly
on a quarterly basis in 1Q, we maintain our
conviction around the health of investment
activity as evidenced by the stability seen
in completed financings at both the early
and late stage. The primary driver of the
decline in round counts can be attributed
to the angel market, which has continued
to see the pace of investment decline
rapidly since mid-2015. However, we see
the proliferation of pre-seed investment
activity as a key driver in the market
that can be rather elusive from a data
perspective as many of these deals happen
under the radar. Thus, activity across
some of the earliest stages of investment
activity may be understated, and we think
entrepreneurs are finding novel avenues to
finance new ideas and business ventures.
Late-stage activity remains poised for
another notable company fundraising
year. Unicorn activity represented over
21% of all venture capital invested in the
US in 2017, with more than $17.5 billion*
deployed into companies valued over $1
billion during the period. Through the first
quarter of 2018, activity in that subset of
the market remains on track to surpass
2017’s record total. Investors have piled
roughly $5 billion in net new* capital into
such companies, accounting for over 18%
of all capital invested in the US last quarter.
More invested in 1Q 2018 than in full-year 2009
US VC activity
1Q marks fourth consecutive quarter with more than $20B invested
US VC activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*two rounds previously closed in 4Q have been adjusted to a 1Q 2018 close due to more capital being added
5
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
PE continues to be highly involved
US VC activity with PE participation
Strong start to year for unicorns
US unicorn activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
**Amount includes $2.5 billion from two rounds originally closed in 4Q 2017
While late-stage investments in unicorn
companies have become more prominent
given the growing age of privately held
businesses, round sizes of $1 billion+
certainly have not. That said, 1Q alone
saw three such transactions close, with
both Lyft and Faraday Future holding final
closes on rounds launched in 4Q at $1.7
billion and $1.5 billion, respectively, and
Uber closing a $1.25 billion round. For
comparison, 2017 in its entirety saw just
three completed financings of $1 billion or
more. Moving forward, we think rounds
of this magnitude will still remain outliers.
Moreover, as behemoths such as Uber tap
investors for massive rounds, one item
that should be noted is that not all of that
money is primary capital being used to fund
operations. Rather, an increased proportion
of some of these rounds represents
secondary capital where certain investors
and employees are finding avenues to
generate liquidity as hold periods have
lengthened and exit processes have been
delayed.
Last, private equity continues to play an
increasing role in the venture market. $8.5
billion worth of transactions last quarter
involved PE investors, the highest figure
we’ve tracked since mid-2012, despite
these firms participating in just 8% of
VC financings. On the exit front, the
proportion of completed VC-backed sales
to PE declined relative to what we saw in
2017, during which the highest percentage
of exits were completed to PE firms that
we’ve ever tracked. Given we are still early
in the year, however, we fully expect to
see increased activity by PE groups in the
venture markets similar to what we saw in
2017 for the following reasons.
Through the first quarter of the year, 15%
of all completed PE transactions were
done in the software space, which is up
relative to the 12% number we’ve seen
historically. Further, the PE transaction
ecosystem continues to support such deals,
particularly as companies have been able
to establish recurring revenue, cashflow
positive and cash-efficient software
businesses that fit nicely with the debt
structures PE firms typically utilize to
complete leveraged buyouts. As roughly
40% of all venture transactions consistently
occur in the software space, the venture
markets will continue to provide a fertile
sourcing ground for PE firms looking to
locate quality software targets.
Early-stage rounds grow in size by roughly 50%
Median deals size ($M) by stage
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
$11.0$6.8$6.6$12.2$9.1$9.9$19.3$26.6$25.7$23.1$8.5663
451
424
515
556
619
749
764
652
642
139
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
$6.6$2.4$2.6$13.6$17.0$18.6$17.5$7.2**7
7
9
28
24
23
71
81
55
75
17
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
$1.0
$1.4
$6.0
$9.2
$11.1
$15.0
$0
$2
$4
$6
$8
$10
$12
$14
$16
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Angel/Seed
Early VC
Late VC
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7
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
$449$407$394$669$675$629$541$750$849$1,115$1,253$871$1,462$1,086$1,344$1,555$1,289$1,416$2,045$1,846$2,061$2,146$2,109$1,936$1,671$1,714$1,719$1,548$1,587$1,690$1,895$1,808$1,6240
200
400
600
800
1,000
1,200
1,400
1,600
$0
$500
$1,000
$1,500
$2,000
$2,500
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
Angel & seed activity drops
US angel & seed activity
Angel & seed
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
$0.58
$0.86
$1.69
$2.20
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017 2018*
Angel
Seed
Median seed deal surpasses $2M
Median US angel & seed deal size ($M)
Despite deal count across the angel/
seed market continuing to decline, deal
value at the stage has remained relatively
heightened. The $1.6 billion raised in 1Q
marks the 15th straight quarter that more
than $1.5 billion was invested into angel/
seed deals. In fact, no less than $1 billion
has been invested in the stage during each
quarter since 4Q 2012. Prior to that period,
the $1 billion mark had only been reached
three times in our datasets.
Seed deals have reached a median
transaction size of $2.2 million and a
median post-money valuation of $10.7
million, far and away the largest we have
recorded. Record-sized seed funds continue
to underpin capital availability at the stage.
For instance, Sequoia Capital closed a $180
million seed fund in January, while Khosla
Ventures has announced it is raising a $400
million seed vehicle as well. In addition, we
have seen various other firms continue
investing in seed deals despite running $1
billion+ vehicles. While writing seed-sized
checks could appear as a peculiar strategy
for some of the larger funds, the Dropbox
IPO serves as a good example of why such
transactions can still be a valuable portion
of a larger firm’s investment strategy. To
illustrate, Sequoia realized around $2 billion
from Dropbox’s IPO, a company it has held
in its portfolio since participating in its
2007 seed round.
The heightened deal sizes and valuations
are also being driven up by the continued
aging of companies raising early-stage
institutional capital. The median age of
companies raising angel & seed funding in
1Q came in at three years post founding,
older than the median age of a company
raising a Series A round in 2014, and nearly
double the age of a company raising an
angel/seed deal in 2011. This shift in age
isn’t so much of a trend as it is a change to
the traditional investment timeline. Many
startups require less capital for operation
than before, specifically many software
companies that can run cloud servers and
hire freelancers until full-time engineers are
necessary. This in turn allows businesses
to be more developed when first engaging
institutional investors, garnering larger
deals and valuations.
8
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
$1.4$1.0$1.0$1.2$1.9$1.3$1.5$1.5$1.6$2.1$1.9$1.5$2.1$1.6$1.5$2.0$1.8$1.7$2.2$2.0$2.0$2.4$2.1$2.3$1.8$1.7$2.0$1.6$1.8$2.1$1.6$2.0$2.40
200
400
600
800
1,000
1,200
$0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
First financings
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 Financings
Follow-on Financings
First financings continue to decline
First financing vs. follow-on deal by count
The number of startups receiving their first round each year has slowly declined
US first-financing activity
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
First Financings
Follow-on Financings
Angel/seed deals have fallen furthest
US first-financing VC rounds (#) by stage
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
9
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Cap table analytics can provide
transparency to an opaque industry
Companies like Capshare are releasing large
descriptive data sets about startup cap
tables for the first time. The data, based on
thousands of cap tables, provides an insider
view of how equity is actually structured in
startups.
The data show that cap tables evolve in fairly
predictable ways as the company grows. For
example, employee ownership decreases
from 100% at founding to approximately
70% in the seed round and starts to level off
around 38% by Series C financings.
Employee ownership (and by extension,
investor ownership) is so predictable that
it almost perfectly fits a log trend line. This
math can help both VCs and founders
understand typical dilution, as well as
calm jittery founders by helping them to
understand that although they will likely
experience significant dilution, they can also
still expect very high personal returns in the
end.
Other predictable aspects of cap tables
include option pools. Option pools are
typically set up before seed rounds are
completed. Once they are established, they
typically hover around 15% of the total
capitalization of the company (including
issued and unissued options) throughout
the startup’s lifecycle. Unissued options
decrease slightly as a proportion of total
options as the company grows—but only just
slightly. Capshare data shows that Series A
companies have on average 6% of the total
capitalization of the company available for
new hires, while Series C companies have
only 3%.
But cap table data also revealed a few
surprises, especially around waterfall
analysis. Waterfall analysis takes an assumed
value of the company as an input and then
shows you exactly what amount of that
value each shareholder would be entitled to
receive.
For example, you could assume a company
is worth whatever its last post-money
valuation was and then run a waterfall
analysis. When we did this we found a tale
of two kinds of startups. Generally, startup
averages are often skewed upward by the
highest performing startups, and that is true
in waterfall values as well.
Th graph on the right shows aggregate
waterfall value to founders based on the
stage of company. When looking at both the
mean value and the median value, the mean
value will be much more affected by the
higher performing startups, while median is
probably a truer representation of a typical
startup. As the graph points out, the median
founder waterfall value plateau around
Series B and doesn’t really increase much
after. However, for those founders in highly
successful startups, the value of their shares
continues to grow rapidly as the company
moves further along the venture lifecycle.
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100%
73%
60%
43%
37%
36%
0%
20%
40%
60%
80%
100%
120%
Common
Seed
Series A
Series B
Series C
Series D+
Median
Log.
(Median)
Employees dilute quickly
Employee ownership by stage
1%
7%
7%
8%
11%
11%
9%
7%
6%
8%
6%
4%
3%
5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
Common Common +
Convertibles
Seed
Series A
Series B Series C Series D+
Unissued
Issued
15% option pool typical
Issued & unissued options by stage
Founder median peaks early
Aggregate founder waterfall values ($M) by stage
$2.8
$2.0
$5.0
$16.8
$19.5
$24.7
$42.0
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Common Common +
Convertibles
Seed
Series A
Series B
Series C Series D+
Average
Median
Jeron Paul, Founder and CEO, Capshare
Source: Capshare
Source: Capshare
Source: Capshare
10
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Early-stage VC
$2.9$2.5$2.6$2.5$3.3$2.9$3.5$3.8$3.0$3.6$3.1$3.1$3.5$3.7$3.4$4.4$4.6$5.1$5.0$5.5$4.9$7.3$6.3$6.2$6.2$6.5$6.1$5.0$5.7$6.7$7.8$9.5$9.90
100
200
300
400
500
600
700
800
900
$0
$2
$4
$6
$8
$10
$12
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$25M+
$10M-
$25M
$5M-
$10M
$1M-
$5M
$500K-
$1M
Under
$500K
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$25M+
$10M-
$25M
$5M-
$10M
$1M-
$5M
$500K-
$1M
Under
$500K
81 deals of at least $25M in 1Q
US early-stage activity (#) by size
Deals <$10M account for 11% of value
US early-stage activity ($) by size
Over $9B was invested at the early stage during each of past two quarters
US early-stage VC activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
For two consecutive quarters now, the
early stage has received more than
$9 billion in investment, far and away
the highest totals we have seen. For
comparison, 2010 saw a total of $10.5
billion invested throughout the entire
year, and prior to 4Q 2017 there had never
been a quarter with more than $8 billion
invested. Some of this enormous growth
is due to just a few deals over the past few
quarters, but taking out the largest deals
won’t change the trend. Early-stage deals
are simply getting larger. The median age of
companies that raised a Series A or Series
B round in 1Q reached 3.3 and 5.1 years,
respectively. Both are more than a year
older than companies raising at the same
stage a decade ago. “Seed is the new Series
A” was a common thought a few years ago,
and that seems more and more plausible as
time goes. Capital availability has filtered
down to the earliest stages of VC, and the
ripple effect has manifested in growing deal
sizes as venture investment shifts further
into the business lifecycle. We believe that
this trend will persist as businesses come
to the early stage better capitalized with
strong plans for growth.
$4.4$5.9$4.0$4.5$9.4$6.6$7.4$5.0$5.9$6.6$6.3$6.0$6.2$6.7$7.1$6.6$9.1$13.4$9.8$12.2$13.0$11.2$14.0$10.6$11.7$15.7$9.8$7.7$9.6$13.4$13.2$10.0$16.70
100
200
300
400
500
600
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
11
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Late-stage VC
Deal size growth clearly visible
US late-stage activity (#) by size
Late-stage deal value has stayed at historic highs
US late-stage activity
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
The late-stage continues to be an example
of and realization of the robust US
fundraising environment, along with the
increased appetite for venture investment
across the capital markets. 76 late-stage
rounds of $50 million+ were raised in
1Q, including 41 of $100 million or more,
contributing more than 70% 1Q late-stage
deal value, roughly double the proportion
seen in 2012.
Over the past four years, more than $150
billion has been raised by US VC funds, a
figure that doesn’t seem outlandish when
comparing it to the elevated investment
totals from those years. More than $10
billion in late-stage capital has been
invested in all but four quarters since 2Q
2014, an amount that hadn’t been reached
in any other quarter since at least 2006 and
likely since the dot-com bubble in 2000.
Several funds either new to the market
or currently being raised will undoubtedly
help continue this trend. Sequoia Capital
is looking to raise up to $12 billion across
several funds, Khosla Ventures is raising
a $1 billion fund to go along with its $400
million seed vehicle, and other firms that
will be investing out of $1 billion+ funds
include Battery Ventures and General
Catalyst. While mega-funds aren’t new,
they will likely increase in count and size
in order to keep up with the late-stage
investment strategy of SoftBank’s Vision
Fund, which currently has little competition
for its multi-hundred-million-dollar late-
stage deals. For context, SoftBank’s 1Q
2018 deals had an aggregate value of $3.4
billion, not including its $8 billion secondary
investment in Uber.
While the IPO market appears to be
improving and optimism for tax-driven
acquisition strategies has increased, exit
activity continues to subside. Just three
companies were acquired during the
quarter for more than $300 million, while
15 late-stage rounds were completed
on at least that amount. The grow-at-all-
costs movement has left many late-stage
companies needing to continue raising
capital to focus on revenue growth and
monetization of their platforms, making
further private capital raises the likeliest
bet in current conditions.
12
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Key points for client capital needs and
liquidity in today’s venture landscape
The US venture capital industry continues
to evolve. In response to record amounts
of capital deployed into early-stage
companies, coupled with fewer (and later)
traditional exit events, we have begun
to see a growing interest in changes to
investment and executive compensation
structures. With $150 billion+ in VC funds
raised over the past few years alone, the
industry has been left with excessive
capital available across the entire lifecycle,
leading to concerns over overfunding
and limited release valves for future exits.
The recent rise in active participation of
nontraditional VC investors has only added
fuel to that fire. But while in many ways the
discussion has focused on the late stage,
the broader market and earliest stages of
funding are benefiting from that increase,
while also encountering new challenges
that accompany such benefits.
The challenges, however, present an
interesting opportunity for the industry
and ecosystem to evolve. As companies
move through their lifecycles, advanced
planning and preparing remains an
important part of each new round. The
increase in strategic, family office, private
equity and hedge fund participants (to
name a few) in early stages has broaden the
range of various investor attributes such as
desired rates of return, timelines to return,
and risk profiles. Accordingly, selecting and
courting the right mix of investors to hedge
contrasting investor attributes makes
planning for the next round a critical part
of planning and negotiating any company’s
current round is more important than
ever. Establishing guidelines for the many
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interests at the table is critical for setting
reasonable expectations of a company’s
long-term strategy.
Investor Diversity Brings Stability
With traditional institutional venture
capital firms increasingly focused on later
stage investments, companies raise several
millions of dollars before they begin their
search for institutional capital to lead their
Series A rounds. As previously mentioned,
this is at least partially because angels
and pre-seed funds are no longer the only
material players involved at the earliest
stages.
Family offices, strategic partners and other
sources of capital historically uninterested
in seed-stage financings have entered the
arena, pumping money and growth into
startups well before traditional venture
capital is ever invested. Investment from
so many different parties can generate
challenges, but the diversity of a startup’s
investor base can yield stability around
future capital and liquidity needs during
both good times and bad. Many active
angels, for example, can get a company off
the ground, but far fewer have sufficient
capital that can be deployed into future
follow-on rounds. Their smaller risk
tolerance also makes angels a relatively
unreliable source for future capital needs
if the company needs a boost during rough
times to hit the benchmarks they had
hoped to reach with the first investment.
Charles E. Torres, Partner, Emerging Companies & Venture Capital, Perkins Coie
6.4
6.1
5.4
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
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
As exit times lengthen, planning ahead is important
Median and average time to exit (years)
13
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
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Conversely, the new class of early-stage
participants tend to have different, or even
opposite, appetites, expectations and
tolerances.
Accordingly, a diversified group of
investors allows a company to consider a
variety of investment timelines and blend
expectations by having those with deeper
pockets “decrease” the expected liquidity
timelines of less patient investors. Strategic
partners and family offices generally
invest with more patient capital and can
complement an investor group due to their
lesser need for a quick return. Differing
return timelines provide the opportunity
for startups to build the company through
slower, more sustainable means to continue
raising private capital without investors
clamoring for an exit. As the venture
timeline lengthens, a pure exit is not always
just over the horizon or even part of the
plan. In this case, the stability of long-term
capital can help continue to support the
founder’s vision.
Planning Future Raises is Crucial
Planning ahead is less obvious than
one might think. During an era of high
valuations and deal sizes, the direction
of the company can be lost to clouded
vision and oversized checks. But taking
the time to plan out two capital raises
down the line can keep the business
on the correct forward path, which is
instrumental in aligning the interests of all
parties. Of course, planning for how to get
the company through the next round of
investment will make business operations
run smoother and keep a process in place
for how to best handle adversity, but
modeling out the next two rounds will also
make teams think through strategies and
align capital expectations for both investors
and founders on how much capital will
be best for the company to take on, as
prospective valuations, new capital and
dilution will weigh heavily on a company’s
growth or exit strategy.
Successfully aligning everyone’s
interests and expectations is one pillar
of a successful planning process. As
time goes on, management can become
disincentivised. Along the same vein, the
amount of capital being introduced into the
industry can be potentially damaging to
the investor-founder relationship, should
one side view capital usage to be skewed in
favor of the founders over the investors (or
a particular class of investors).
Seek to Implement and Encourage
Liquidity and Incentive Strategies
Enhancing upside through option and other
management incentive pools, including
refreshing such pools as needed, can
keep management engaged for the long
term. Simultaneously providing liquidity
to founders with secondary repurchases
and sales can also reduce unhelpful
stressors and resolve tensions. Conversely,
I’ve started exploring the novel idea of
secondary offering participation rights,
which provide less patient investors with
greater certainty that they can participate
in any secondary offering, because that
helps them in a similar and reciprocal
manner. The transparent discussion and
provision of these pre-exit liquidity rights
increases the chance that founders and
investors will find some early liquidity, pare
down their crowded capitalization tables
(which are increasingly filled with equity
issued pursuant to convertible securities)
and bring in fresh, long-term investors, all at
the same time.
As companies move along the venture
lifecycle, exits at some point move to
the forefront of discussion and business
positioning. The high volume of capital
availability has created a backlog of
companies in the market that will likely
move toward exit in the near term. While
the IPO market looks to be rebounding
at the moment after two less-than-stellar
years, and recently passed tax legislation
has also left corporations with extra cash
to spend on acquisitions, such a decision
should be approached with caution. The
public markets have proven tumultuous,
and running a public company (or part of a
public company, if acquired by one) is not a
job fit for (or desired by) everyone. When it
comes time to begin the process of talking
about a future exit, the investors and the
management team need to understand
where the other stands on the issues of
both the timing and type of an exit.
14
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
West Coast nears $17B in 1Q value
1Q US VC deal activity by region
Despite opportunities outside traditional VC hubs, few trends have changed
1Q 2018 US VC deal activity by region
Activity by region
PitchBook-NVCA Venture Monitor
San Francisco sees value share surge
Percentage of deal value ($) by MSA
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
West Coast
39.0% of 1Q Deals
59.9% of 1Q Deal Value
Mountain
7.2% of 1Q Deals
2.4% of 1Q Deal Value
Midwest
1.4% of 1Q Deals
0.7% of 1Q Deal Value
Great Lakes
8.5%of 1Q Deals
2.6% of 1Q Deal Value
Mid-Atlantic
21.3% of 1Q Deals
15.6% of 1Q Deal Value
New England
9.3% of 1Q Deals
10.3% of 1Q Deal Value
Southeast
6.6% of 1Q Deals
5.8% of 1Q Deal Value
South
6.6% of 1Q Deals
2.7% of 1Q Deal Value
30.5%
36.9%
5.8%
11.9%
10.9%
9.8%
14.9%
9.4%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
San Francisco
Los Angeles
Boston
New York
Region
Deal Count
Deal Value ($M)
Great Lakes
144
722.9
Mid-Atlantic
361
4,405.2
Midwest
23
196.8
Mountain
122
674.5
New England
158
2,899.6
South
112
774.6
Southeast
111
1,649.6
West Coast
661
16,920.6
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16
1Q 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
Sector investment trends remain stable
US VC activity (#) by sector
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
20082009201020112012201320142015201620172018*Commercial
Services
Consumer Goods
& Recreation
Energy
HC Devices &
Supplies
HC Services &
Systems
IT Hardware
Media
Other
Pharma &
Biotech
Software
HC devices starts year off slow
US VC activity ($B) by sector
7.1%
8.0%
38.4%
39.6%
6.2% 6.2%
25.5% 25.6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Pharma & biotech
Software
HC devices & supplies
Other
Software continues with most deals
Top sectors as % of total VC (#)
15.5%
16.3%
35.7%
41.5%
5.7% 4.9%
23.2%23.4%
0%
10%
20%
30%
40%
50%
60%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Pharma & biotech
Software
HC devices & supplies
Other
65% of deal value invested in two sectors
Top sectors as % of total VC ($)
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
17
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
As the move to automate manufacturing
intensifies, we are witnessing the rise of
cobots. Cobots, as the name implies, are
robots deployed alongside human workers
to assist them in a variety of tasks, adding
flexibility and cost efficiency. Investors
are taking note, as initiatives like Industry
4.0 take hold and the use of advanced
manufacturing technologies explodes. The
collaborative robotics market is growing
at a CAGR of 57.4% and is now projected
to reach $4.4 billion by 2023, up 25x from
2016.
Once the cornerstone of the US economy,
manufacturing has declined precipitously
from its peak four decades ago. At the
sector’s height, US manufacturing jobs
totaled nearly 20 million, or 22% of
US employment. Driven by off shore
manufacturing and, more recently,
automation, by February 2018 there were
12 million US manufacturing jobs, or about
8.5% of all US jobs. However, there is a
new type of automation emerging that is
designed not to replace human workers but
to complement them, and the jobs decline
is starting to reverse.
The adoption of cobots is primarily driven
by small and medium-sized businesses.
Manufacturing tasks in these businesses
tend to be more flexible and operations
more easily modified, making the cost
of integrating cobots more manageable.
Cobots are designed to assist human
workers with a variety of low-skill tasks,
including machine tending, material
handling, assembly tasks and packaging,
and are designed to be “aware” of their
surroundings so as not to interfere with or
harm human workers. An added benefit is
that there isn’t a need to set up designated
areas for robot-only operations, which is
costly and can add inefficiencies to the
production process.
The hourly cost of cobots is also
competitive with that of manufacturing in
China, allowing US-based manufacturers to
add incremental capacity in an affordable
way. Given the pressure to reduce the
cost of manufacturing and production, the
flexibility afforded by cobots collaborating
with human workers makes cobots an
attractive solution.
Investment opportunities grow in
advanced manufacturing
The potential of machine-human
interaction in the workplace is driving
investor interest in this developing area of
robotics. The number of VC investments in
advanced manufacturing took off in early
2014, with a large proportion flowing to
robot developers and manufacturers.
Investment in advanced manufacturing in
4Q 2017 reached a record $461 million as
more mainstream VC investors became
active in applied robotics. Driving this
trend is a growth in short-term market
opportunities, unit economics and
recurring revenue. Traditional hardware
companies tended to sell their products in
single transactions. These days, however,
robotics companies are adopting a HAAS
business model, which effectively spreads
the cost over a contracted period and
allows companies to bundle other services
such as software packages, maintenance
services and replacement parts. The HAAS
model also gives robotics companies a
more predictable revenue stream, giving
startups a greater ability to compete with
large established OEMs that have greater
financial resources.
Rethink Robotics and AUBO Robotics
are two US-based, VC-backed startups
leading the cobot revolution. They are
competing with an international assortment
of companies, including Universal Robots
(Denmark); KUKA Robotics Corporation,
MRK-Systeme and Bosch (Germany); ABB,
MABI Robotic and F&P Personal Robotics
(Switzerland); and FANUC and Kawada
Industries (Japan).
As collaborative robots emerge, investors
should keep in mind that they are just
one piece of the automation puzzle. The
advancement of cobots and robots, for
example, is directly linked to developments
in AI, robotics and sensor technology.
Supporting subsectors include RFID tagging,
monitoring, predictive analytics, inventory
and ERP systems, as well as industrial
IoT. Ultimately, the combination of these
technologies will shape the factories of the
future.
Advanced manufacturing: Can a cobot
help you with that?
0
5
10
15
20
25
30
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2012
2013
2014
2015
2016
2017
2018
Deal Value ($M)
# of Deals Closed
Sector has seen marked uptick in deal values recently
US VC activity in advanced manufacturing
PitchBook-NVCA Venture Monitor
Matt Trotter, Managing Director of Hardware and Frontier Tech, Silicon Valley Bank
18
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Life sciences
$9.2$7.9$7.7$8.6$8.7$9.7$12.4$14.9$12.6$17.6$6.0870 869
952
1,018
1,086
1,148
1,221
1,258
1,094
1,155
241
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
LS investment reaching new heights
US VC activity in life sciences
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
Investment split between sectors
US VC activity in life sciences (#) by sector
13.3%
14.2%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
As other sectors fall, LS increases share
US VC activity in life sciences as percent of total VC
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
LS deals increasing along trends
US VC activity in life sciences (#) by size
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
Policy changing CVC in life sciences
After 2017’s record participation of
corporate investors in VC deals, capital
invested continues to sustain elevated
levels, with deals involving CVCs totaling
$14.1 billion as of 1Q. However, after three
years of strong activity, the CVC deal
count in the first quarter declined 15%
YoY, resting at 302 closed deals. Similar
to trends we’ve seen over the past few
quarters, the software and life sciences
sectors (pharma & biotech, and healthcare
devices & supplies) remain favorites for
corporate VCs.
Consistent with activity from the last four
years, deals closed by life sciences startups
accounted for nearly 16% of all CVC deals
and 22% of capital invested in 1Q. Due to
biotech’s capital intensity and high failure
rates, we believe venture activity remains
strong in the space because investing
in drug or technology development via
startups tends to be more cost effective
than internal research and development for
incumbent corporations. Additionally, larger
healthcare companies do not typically have
the same agility to innovate at the same
rate as smaller, leaner startup companies.
Consequently, we find that life sciences
startups tend to have a stronger rate of
acquisition by their CVC backers compared
to non-life sciences startups. In 2017,
9.4% of life science startups that received
corporate funding were acquired by the
sponsoring corporation, whereas only 6%
of non-life science startups had the same
outcome. This has been a long-term trend,
as life science startups have exceeded non-
life science startups in acquisition rates by
a corporate funder for seven of the last ten
years.
19
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Corporate VC
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
Corporate VC sees largest quarterly deal value to date
US corporate VC participation activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
$10.3$6.5$8.1$13.2$12.2$15.1$27.3$37.2$34.6$37.2$14.1699
497
577
738
863
1,095
1,338
1,468
1,351
1,370
302
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
9.4%
20.0%
6.0%
11.8%
0%
5%
10%
15%
20%
25%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Life Sciences
Non-Life Sciences
Life sciences leads in follow-on acquisitions
Acquisition made by CVC or parent corporation
0
5
10
15
20
25
30
35
40
45
50
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
IPO
Buyout by Other
Acquired by Other
Acquired by Corporate Investor
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
Most companies acquired by outside firm
CVC investment exits (#) by type
Changes in the regulatory environment
driven by new leadership in the FDA
have the potential to change life sciences
investment by CVCs or parent companies.
Under its new leadership, the FDA has
prioritized faster and more efficient drug
approval processes. Given that one of the
greatest costs of drug creation is clearing
regulatory approval, these developments
can reduce R&D costs to both startups
and large incumbents. On one hand, this
could encourage continued investment by
CVCs, as startups will theoretically be able
to stretch funding dollars further and reach
milestones faster. However, a faster and
less expensive route to drug approval could
also incentivize incumbents to focus on
internal development instead.
20
1Q 2018 PITCHBOOK-NVCA 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
Many CVC deals occur at late stage
US corporate VC activity (#) by size
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$50M+
$25M-
$50M
$10M-
$25M
$5M-
$10M
$1M-
$5M
Under
$1M
Unicorn deals account for high % of CVC
US corporate VC activity ($) by size
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
0
50
100
150
200
250
300
350
400
450
$0
$2
$4
$6
$8
$10
$12
$14
$16
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
Angel/Seed
Early VC
Late VC
Similar to overall VC, CVC deal count has slid while value has risen
US corporate VC participation activity
21
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
As tech disrupts traditional industries,
corporations boost startup investment
Q&A with Tracy Isacke, Head of Corporate Relationship Management, Silicon Valley Bank
Why is corporate venture valuable for
promoting innovation?
The speed of innovation and disruption
is accelerating. Large corporates and
their industries are being challenged by
incredibly nimble startups that often
look to pick off pieces around the edges
of a business before coming to dominate
an entire industry. To compete, some
corporations have created in-house
“startups,” but many larger corporations
now recognize that internal innovation
alone is not enough. They view promising
startups as potential partners in their bid to
push the innovation envelope and, in turn,
are creating corporate venture capital arms.
A decade ago, it was very hard and
expensive for startups to scale and
compete with large multinational
organizations. Since then, the barriers to
entry and growth have fundamentally
changed, as mobile and cloud technologies
and the drop in computing costs are all
creating incredible opportunities to scale
businesses at a faster pace and at a fraction
of the cost. The ability to scale also has
accelerated with the ease of access to
capital. Now, as many startups are scaling
more efficiently, corporates have realized
it’s in their strategic interests to foster
value creation through partnerships,
investments and acquisitions.
The takeaway is that new market and
innovation models are keeping even the
most established companies on their toes.
This is very good news for entrepreneurs
and the VC funding landscape overall:
Venture dollars, corporate expertise, and
access to customers and distribution
channels are flowing to almost every
industry and fueling innovation.
your KPIs strategic, financial or a blend of
both? Often, it’s most sensible to pursue
a smart balance. The term “strategic” is
often mistranslated as a lack of concern for
financial success when, in fact, it should
signal a strong alignment with business
initiatives, including profitability.
Beyond succinctly defining your goals,
clarity about your approach is also
paramount. It’s important to understand
what areas you care to invest in, articulate
the decision-making process and
communicate how you plan to differentiate
yourself as a source of value-added capital
to the startups. Finally, it’s very important
not to treat corporate venture investment
as a P&L within the core business.
Traditional VC investors take a long-term
view of gaining returns from their portfolio
investments, and corporate investors
should adopt the same level of patience.
At a time of increasing disruption, corporations must innovate to survive, and many are doing so by partnering with top startup
entrepreneurs and founders. In this edition, we ask Tracy Isacke, Head of Corporate Relationship Management at Silicon Valley Bank,
about the hottest trends and upcoming opportunities for corporate venture capital in the global innovation ecosystem.
In your experience, what strategies enable
CVC arms to be successful?
CVC success requires a strong commitment
from executives at the top of the
organization. Trying to set up a CVC arm
with half measures—minimal funding,
slow decision-making, lack of C-suite
champions—is typically a recipe for failure.
A key question to resolve at the start: Are
...barriers to entry and
growth have fundamentally
changed, as mobile and
cloud technologies and the
drop in computing costs
are all creating incredible
opportunities to scale
businesses at a faster pace
and at a fraction of the cost.
It’s important to
understand what areas you
care to invest in, articulate
the decision-making process
and communicate how you
plan to differentiate yourself...
For more than 30 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).
22
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Many corporations have essentially
joined the ranks of VC investors, adding
investment teams and dedicated funds,
but sometimes their goals veer from
those of traditional VCs. Strategies and
return profiles may differ. Is CVC growth
ultimately good for the VC industry as a
whole, and what effects have you seen?
It depends. When corporates get it right,
and they understand the value they can
bring to a startup partner or an entire
industry, then I think they truly have
the ability to change the trajectory of a
company or a market for the better. Having
a partner—for example, a corporate investor
who works in a larger organization, has
critical subject matter expertise and can
ask second- and third-order questions—can
be significant when setting up a startup for
long-term success. Having a partner who
truly understands your business can lead
to great working dynamics and help build
a strong board. That said, if corporates fail
to set or articulate their expectations or
execute on their promises, founders and
traditional VC investors are frustrated.
Tracy Isacke joined Silicon Valley Bank in 2014 and leads the company’s
Corporate Relationship Management Group, which was established in 2009 to
build connections between investment groups at some of the world’s largest
companies and emerging technology and life science startups.
As head of the group, Tracy is responsible for Silicon Valley Bank’s relationships with corporate
venture funds, corporate development teams and innovation groups at Fortune 500 companies.
Prior to joining SVB, Tracy was EVP New Business Ventures at Telefónica Digital where
she identified investment opportunities in Silicon Valley, Israel and Europe with potential
to accelerate Telefónica’s business. She also drove an international Global Partner team to
deliver unique partnerships and Direct-to-Bill opportunities for Telefónica across 25 operating
businesses in Europe and Latin America.
Again, that’s why mission, structure and
approach are so important for corporates
to carefully define upfront. Understanding
how and when to come in as a strategic
investor is another key decision: Will you
add more value at the seed round or at
Series A or B? Should you be leading the
round? Have you set aside follow-on
investment funding, even if the company
veers away from your strategic direction?
Planned well and with the right team in
place, I think CVC arms provide a fantastic
source of support and scale for startups
that traditional VCs may not be able to
match. From sharing leads for channel
partners and customers to promoting pilot
opportunities, CVC arms bring a wealth of
value beyond their capital.
How have executives’ perspectives
changed in the past decade?
My belief is that all corporates, in every
single industry, do not feel safe. Previously,
a large company executive could afford
to be a little dismissive of the founders
walking in with big claims of how they
were going to disrupt an industry. Now,
we have so many examples of startups
doing just that. Corporates have a very
different perspective today: Innovation and
partnership have become imperative, not
optional.
Corporate venture initiatives are
becoming more professional, including
building blended teams of investors who
understand both the corporate and the
What role does SVB play in helping
corporates connect with the innovation
economy? How do you act as a strategic
partner for corporations?
We sit at the heart of this incredible
intersection of startups, VC investors
and corporates, and this creates a true
innovation network. We have deep
knowledge and understanding of a variety
of industries and share our contacts,
analysis and observations through highly
curated events, tailored introductions
and meetings, and unique market insights.
We also act as a strategic partner and
consultant, should corporates seek help
designing their approach to innovation,
such as how to identify the best working
model, who to tap for support and how
to create lasting impact. We work with
a number of partners and can also help
corporates navigate the “existential crises”
that are bound to appear when thriving in
disruption.
Planned well and with the
right team in place, I think
CVC arms provide a fantastic
source of support and scale
for startups that traditional
VCs may not be able to match.
We sit at the heart of this
incredible intersection of
startups, VC investors and
corporates, and this creates a
true innovation network.
venture worlds and what it takes to create
effective partnerships with their portfolio
companies.
23
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Growth equity
$3.9$9.3$3.8$2.7$9.5$5.6$5.7$6.3$3.9$6.6$9.2$5.9$7.2$6.9$5.6$6.0$9.1$12.9$14.0$10.1$11.8$12.4$13.8$10.3$12.0$15.8$6.6$9.6$8.7$15.6$12.0$9.4$14.60
50
100
150
200
250
300
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Deal Value ($B)
# of Deals Closed
GE on pace for fifth straight year of $40B in value
US growth equity activity
Deal volume picking back up
US growth equity activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
The last four years of growth equity
activity reflect the recent paradigm shift of
investors accommodating larger and more
mature businesses in the private markets.
In the first quarter of 2018, growth equity
accounted for $14.6 billion of deal value
across 226 deals. This total puts capital
invested in 1Q 2018 as the third-strongest
quarter since 2010 and on pace to easily
best growth equity tallies from the four
years prior. This represents a more than
doubling of average deal value from the
preceding six years given the 2008-2013
average of $22 billion. Trends in private
markets tend to evolve over extended
periods, but the abrupt rise of growth
equity was driven by the drastic change
in the VC ecosystem to accommodate
unicorns and the huge fund flows into
the asset class to chase high returns. For
instance, the volume of $50 million+ deals
made up 60% of total VC deal value during
1Q 2018, up from 20% in 2009, signaling
the growing influence of large deals over
the broader VC market.
PE growth investors have become more
willing to participate in large technology
deals as that industry has matured. The
main change in technology that drove
increased enthusiasm from PE investors
was the proliferation of the SaaS business
model. The predictable, recurring
revenue and cashflows generated by SaaS
businesses provide some stability, plus
the higher growth prospects fits into a
more traditional PE investment style. This
is illustrated by SaaS representing 35%
of total growth equity deals by count,
including participation of PE investors
in the $865 million financing of Katerra,
a construction ERP and supply chain
management platform.
$21.2$12.7$19.7$27.1$25.6$25.6$46.1$48.3$44.0$45.7$14.6580
381
524
617
643
654
854
919
788
860
226
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Deal Value ($B)
# of Deals Closed
24
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$200M+
$100M-
$200M
$75M-
$100M
$50M-
$75M
$30M-
$50M
$15M-
$30M
21% of GE deals exceed $75M
US growth equity activity (#) by size
Growth in overall value is clear
US growth equity activity ($) by size
Sector investment stays steady
US growth equity medians ($M)
PE growth firms primarily look at tech
US growth equity activity ($) by sector
Nearly 10% of all growth
equity financings are of at least
$200M in size
The median size and valuation
of growth equity deals have
steadily grown as demand rises
for the subclass of investment
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
Note: Growth equity is not included as a subset of overall VC data, but is rather its own
unique dataset. See the Methodology, page 35, for more details on this particular category.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$200M+
$100M-
$200M
$75M-
$100M
$50M-
$75M
$30M-
$50M
$15M-
$30M
$40.0
$45.0
$160.0
$162.5
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Median Deal Size
Median Pre-money Valuation
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
25
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
What public market fluctuations signal
for venture dealmaking
As we know all too well, tech company
IPOs tend to slow during periods of
turbulence in the public markets. Naturally,
few want to test their growth story amid
public scrutiny when larger unpredictable
market forces are in play. But what about
the impact of public market turbulence on
private venture investments to scaled tech
companies?
At SVB, by analyzing both public and
proprietary data, we see correlations
around how topsy-turvy public markets
affect venture deal making. More on that in
a minute, but first a little scene-setting.
At the start of 2018, the current bull
market that started in March 2009 seemed
determined to celebrate its ninth birthday
on a heady upswing: The S&P 500 index
closed up nearly 6 percent in January
2018, marking one of the best new-year
debuts in nearly two decades. But February
arrived with a sobering downturn: In the
first three trading days, the S&P 500 gave
up all of its January gains and headed into
correction territory, bottoming out after a
10 percent decline from its January high.
Importantly, during this period of decline,
the long-dormant CBOE Volatility Index
(the “VIX”), which measures expectations
of stock market fluctuations, closed above
30 for the first time since August 2015 and
recorded the biggest single-day jump since
the index was created in 1990.
At the time of this writing, with the
exception of a few bumps caused by trade
war or interest rate fears, the markets
seem to have recovered from that rocky
early February of 2018. The IPO window
appears to be opening again, with the
strong post-IPO gains of Zscaler and
Dropbox, and several more VC-backed tech
companies on deck to go public. Still, the
volatility index remains above the benign
sub-15 level it held through 2017, which
could signal rocky times ahead. What might
this public market experience mean for
private late-stage VC investing?
One way to explore this question is to
compare valuations of public companies
with a set of late-stage venture financings
from the same industry to determine any
differences in valuation characteristics. We
examined revenue run-rate multiples on
over 100 late-stage venture financings in
the enterprise software space (as shown
by the light blue line on the bottom left
chart). We then compared them to the BVP
Cloud Index (as shown by the black line
on the bottom left chart), which tracks the
performance of 50 publicly traded cloud
software companies.
We found that the revenue run-rate
multiples of the late-stage private deals
tracked closely to those in the public
markets, with valuations of private
enterprise software deals marginally higher
than the contemporary median multiple of
public companies in the BVP Cloud Index.
The higher multiple is attributed to the fact
that investors are willing to pay more for
higher growth rates: The median revenue
growth rate for the private companies was
60 percent, compared to 30 percent for
those in the public cloud index.
Not only are late-stage private valuations
influenced by how public markets move,
but prolonged market corrections can also
slow down venture deal activity across the
board. In the 1Q 2016 market correction
that pushed enterprise software revenue
multiples down by half, the ensuing
quarters saw the number of SaaS deals
and capital invested also fall by half before
recovering in 2Q 2017.
In both cases of valuation and volume of
SaaS company investments made, private
markets tended to slightly lag behind
public markets, as it takes time for private
investors to make sense of greater market
movements. Still, it seems clear that for
later-stage private companies, public
market movements not only affected IPO
timing, but they also affected venture deal
velocity and valuation multiples.
Bob Blee, Head of Corporate Finance, Silicon Valley Bank
0x
1x
2x
3x
4x
5x
6x
7x
8x
9x
10x
2015
2016
2017
Private Transactions
Public Companies
Public multiples a leading
indicator for venture
SaaS revenue multiples: Public vs. private
Late-stage SaaS deals slow
during market turbulence
US VC deals of $25M+ in SaaS
$2.9$3.9$4.1$3.2$3.0$3.1$2.1$1.5$2.3$4.4$2.4$3.1$4.20
10
20
30
40
50
60
70
80
$0
$1
$2
$3
$4
$5
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2015
2016
2017
2018
Deal Value ($B)
Deal Count
PitchBook-NVCA Venture Monitor
Sources: SVB Proprietary Data,
BVP Cloud Index
26
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Exits
$9.1$4.8$7.9$9.9$8.8$9.2$7.8$8.6$6.8$26.3$11.9$10.5$3.9$8.9$11.4$13.1$14.0$11.6$18.2$36.8$8.7$10.5$14.5$15.3$11.1$16.7$15.9$9.3$17.2$13.0$14.3$12.6$8.10
50
100
150
200
250
300
$0
$5
$10
$15
$20
$25
$30
$35
$40
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2010
2011
2012
2013
2014
2015
2016
2017
2018
Exit Value ($B)
# of Exits Closed
$16.3$16.4$31.7$34.4$55.5$37.3$80.5$49.0$53.0$57.1$8.1483
482
698
738
867
889
1,067
1,004
873
835
188
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Exit Value ($B)
# of Exits Closed
Exits continue to slide, leaving industry in crunch
US VC-backed exit activity
Exits slide during three of past four quarters
US VC-backed exit activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
Exit flow in 1Q 2018 came in a bit weaker
than the same quarter a year ago, with
$8.1 billion exited across 188 deals,
representing a 19% decrease YoY in deal
count. While this is a material drop, it is
important to remember that exit timing is
largely idiosyncratic and can be delayed
for a multitude of reasons. Most recently
that reason has been larger VC deals, which
supply a longer cash runway for VC-backed
companies and can decrease the sense of
urgency to exit.
To that point, direct secondary sales of
venture shares have become an increasingly
popular way to give existing shareholders
partial liquidity without a full exit event.
Though this volume is not represented in
the aggregate exit data, it is becoming a
substantial source of alternative liquidity.
The monster $8 billion the SoftBank
consortium invested in secondary Uber
shares in addition to the primary round is
an extreme example, but illustrates how
such a transaction can provide liquidity for
early employees and investors. This capital
returned back to VCs is more important
now as portfolio company hold periods
increase, since these secondary sales will
flow through as distributions back to LPs.
Because of these aforementioned shifts
in VC toward financing larger companies,
it’s no surprise that exits over $100 million
are driving the aggregate exit market on
both a value and count basis. Additionally,
due to VC’s reliance on “home-runs,” these
are also the exits that drive the majority
of returns back to LPs. While Ring’s $1.2
billion acquisition by Amazon was the
28
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
9.7x
9.3x
7.7x
9.1x
9.1x
10.4x
9.8x
10.5x
10.1x
10.4x
9.0x
8,652
1,693
835
188
0
2,000
4,000
6,000
8,000
10,000
12,000
0x
2x
4x
6x
8x
10x
12x
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018*
Investments/Exits
# of Investments
# of Exits
$94.0
$70.0
$78.8
$110.0
$0
$20
$40
$60
$80
$100
$120
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Acquisition/Buyout
IPO
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20082009201020112012201320142015201620172018*$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
Exits are getting larger
US VC-backed exit (#) by size
Median IPO has jumped so far in 2018
Median US VC-backed exit size ($M) by type
Slow dealmaking has caused ratio to fall
US VC investment-to-exit ratio
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
largest exit in terms of deal size, the most
valuable company to exit in the first quarter
was Dropbox with its $756 million IPO,
which valued the company slightly under
their 2014 private valuation of $10 billion.
We see the positive early performance
from some of the larger VC-backed IPOs,
during a more volatile and slightly negative
broad stock market during the first
quarter, as a potential bellwether of strong
demand for these listings throughout the
remainder of the year. However, sustained
volatility throughout 2018 would likely
cause some companies to pull their IPO
plans or discourage those companies that
are on the fence. That said, Smartsheet
and DocuSign have filed for IPOs, which
points toward more positivity around highly
valued technology firms pricing on the public
markets heading into 2Q.
29
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Fundraising
$31.7$12.2$20.0$25.9$24.1$21.3$36.2$36.1$40.9$33.3$7.9192
123
161
156
203
224
295
283
300
235
54
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Capital Raised ($B)
# of Funds Closed
Fundraising likely to pick up after slow quarter
US VC fundraising activity
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
Billion-dollar funds loom, but small funds
stick around
So far in 2018, VC funds have closed on
roughly $8 billion in commitments across
54 vehicles, putting both capital raised and
fund count on pace to dip slightly from
2017. A strong showing from micro funds
(vehicles smaller than $50 million) has
pulled down he median fund size, though
we expect a surge of larger funds to close
later in the year to provide a boost to fund
sizes and total capital raised. With two
billion-dollar funds closed already and up to
four more in the pipeline, 2018 could still
surpass last year in terms of total capital
raised.
In the first quarter of 2018, micro funds
made up 50% of fund count for the first
time since 2015. Driven by seed and
early-stage vehicles with niche strategies
or regional focuses, the representation
of smaller funds speaks to continued
development of innovative strategies and
$3.1$1.1$1.0$1.9$1.6$1.5$2.0$2.1$2.4$3.5$0.831
25
36
21
28
23
44
30
27
37
11
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Capital Raised ($B)
# of Funds Closed
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
First-time funds continue to be strong
US first-time fundraising activity
$1.2$0.8$1.1$1.2$1.6$1.8$1.9$1.6$1.7$1.8$0.568
54
73
74
112
118
152
149
138
104
27
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Capital Raised ($B)
# Funds Closed
50% of closed funds in 1Q under $50M
US micro fund activity
30
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006200720082009201020112012201320142015201620172018*$1B+
$500M-
$1B
$250M-
$500M
$100M-
$250M
$50M-
$100M
Under
$50M
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
PitchBook-NVCA Venture Monitor
*As of 3/31/2018
emerging venture ecosystems. True Wealth
Ventures Fund I, for instance, focuses
exclusively on female founders, while
Illinois Ventures’ Emerging Technologies
Fund III seeks to capitalize research
spin-outs from the University of Illinois.
First-time funds have also made a strong
showing with 11 vehicles closed in 1Q
2018, putting this year on track to each
2014’s decade high number of funds closed.
Though capital raised is tracking lower so
far, the outsized effects of mega-funds
(vehicles $500 million or greater) will
likely lift capital raised in the remainder of
2018, as four vehicles including Lightspeed
Venture Partners and Social Capital have
all announced intentions to raise funds of
$1 billion or more in the near future. The
impact from mega-funds is clear, as these
funds made up 47% of all capital raised
by venture funds in 2018, despite only
representing 5% of all closed vehicles.
While three funds of over $1 billion were
closed in all of 2017, three strategies have
already closed in the beginning of 2018—
Norwest Venture Partners’ $1.5 billion and
General Catalyst Partners’ $1.37 billion
fund, as well as $1.25 billion raised across
two complementary vehicles from Battery
Ventures.
VCs have taken to raising larger funds to
garner the capital necessary to maintain
a competitive stance against deep-
pocketed investors, such as SoftBank, as
deal sizes and valuations continue to rise.
But strong fundraising is only possible
if there is sufficient LP demand, and
many institutional investors have been
looking to allocate more to private market
strategies—including VC—while trying
to consolidate their allocation to fewer
managers, resulting in larger but fewer fund
commitments. While these mega-funds
may offer GPs competitive advantages,
they also bring into question whether
their managers can deliver venture-like
returns, as GPs run the risks of overpaying
in outsized rounds and overcapitalizing
startups.
$53.0
$45.0
$146.6 $148.6
$0
$40
$80
$120
$160
$200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018*
Median
Average
Median fund size declines
Median & average US VC fund size ($M)
Several large funds planned for rest of year
US VC fundraising activity (#) by size
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32
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
1Q league tables
Y Combinator
15
Innovation Works
12
Elevate Ventures
10
Slow Ventures
8
Social Capital
8
Alumni Ventures Group
7
BAM Ventures
7
BoxGroup
7
Lerer Hippeau Ventures
7
Plug and Play Tech Center
7
Precursor Ventures
7
SV Angel
7
True Ventures
7
First Round Capital
6
Greycroft
6
Keiretsu Forum
6
Liquid 2 Ventures
6
Techstars
6
500 Startups
5
Khosla Ventures
5
M25
5
Revolution
5
Right Side Capital Management
5
Service Provider Capital
5
SOSV
5
TEDCO
5
Most active investors
angel/seed
Most active investors
early stage
Most active investors
late stage
Alumni Ventures Group
18
New Enterprise Associates
18
Plug and Play Tech Center
14
Y Combinator
14
Ben Franklin Technology Partners 13
Andreessen Horowitz
12
Greycroft
11
Sinai Ventures
10
Alexandria Venture Investments
9
GV
9
Lightspeed Venture Partners
9
8VC
8
Khosla Ventures
8
Kleiner Perkins Caufield & Byers
8
Hemisphere Ventures
7
Lerer Hippeau Ventures
7
Lux Capital
7
Menlo Ventures
7
OrbiMed
7
Revolution
7
Shasta Ventures
7
Social Capital
7
AccelFoods
6
BoxGrop
6
Connecticut Innovations
6
Founders Fund
6
GGV Capital
6
Norwest Venture Partners
6
Service Provider Capital
6
Spark Capital
6
True Ventures
6
Upfront Ventures
6
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
GV
14
Khosla Ventures
13
New Enterprise Associates
12
Bessemer Venture Partners
9
Accel
8
Index Ventures
8
Lightspeed Venture Partners
8
Norwest Venture Partners
8
Andreessen Horowitz
7
Battery Ventures
7
Fidelity Management & Research
7
General Catalyst Partners
7
Bain Capital Ventures
6
Canaan Partners
6
Kleiner Perkins Caufield & Byers
6
Founders Fund
5
HealthQuest Capital
5
Redpoint Ventures
5
Thrive Capital
5
Union Square Ventures
5
Versant Venture Management
5
Baillie Gifford
4
Draper Fisher Jurvetson
4
Fifth Wall Ventures
4
Greylock Partners
4
Intel Capital
4
IVP
4
Salesforce Ventures
4
Sequoia Capital
4
Spark Capital
4
Sutter Hill Ventures
4
PitchBook-NVCA Venture Monitor
33
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
Company
Deal size ($M)
Series/stage
Date
HQ
State
Industry
Lyft
1,700.0
Series H
3/14/2018
San Francisco
California
Software
Faraday Future
1,500.0
Early Stage VC
2/14/2018
Los Angeles
California
Other
Uber
1,250.0
Late Stage VC
1/18/2018
San Francisco
California
Software
Magic Leap
963.0
Series D
3/7/2018
Plantation
Florida
Other
Katerra
865.0
Series D
1/24/2018
Menlo Park
California
Software
DoorDash
535.0
Series D
3/1/2018
San Francisco
California
Consumer Goods &
Recreation
Moderna Therapeutics
500.0
Series G
2/1/2018
Cambridge
Massachusetts
Pharma & Biotech
Wag
300.0
Series D
1/30/2018
Los Angeles
California
Software
Harmony Biosciences
295.0
Early Stage VC
1/18/2018
Plymouth
Meeting
Pennsylvania
Pharma & Biotech
Viela Bio
282.3
Series A
3/13/2018
Gaithersburg
Maryland
Pharma & Biotech
Top 10 largest US VC deals in 1Q 2018
Top 10 largest US VC funds closed in 1Q 2018
Top five largest US VC-backed IPOs in 1Q 2018
Largest US VC acquisitions in 1Q 2018
Fund name
Investor
Fund size ($M)
Close date
HQ
State
Norwest Venture Partners XIV
Norwest Venture Partners
$1,500.0
02/14/18
Palo Alto
California
General Catalyst Group IX
General Catalyst Partners
$1,375.0
03/26/18
Cambridge
Massachusetts
Battery Ventures XII
Battery Ventures
$800.0
02/06/18
Boston
Massachusetts
Battery Ventures XII Side Fund
Battery Ventures
$450.0
02/06/18
Boston
Massachusetts
B Capital Fund
B Capital Group
$360.0
02/08/18
Los Angeles
California
Danhua Capital II
Danhua Capital
$343.2
02/06/18
Palo Alto
California
Elephant Partners II
Elephant Partners
$250.0
03/22/18
New York
New York
Workday Ventures Fund
Workday Ventures
$250.0
02/07/18
San Francisco
California
Accomplice II
Accomplice VC
$205.0
01/18/18
Cambridge
Massachusetts
Aspect Ventures II
Aspect Venture Partners
$181.0
01/23/18
San Francisco
California
Company
Exit size ($M)
Exit post-val ($M) Date
HQ
State
Industry
Dropbox
756.0
8,230.0
3/23/2018
San Francisco
California
Software
Vobile
206.4
1,066.0
1/4/2018
Santa Clara
California
Software
Zscaler
192.0
1,877.3
3/16/2018
San Jose
California
Software
Homology Medicines
144.0
577.3
3/28/2018
Bedford
Massachusetts
Pharma & Biotech
ARMO BioSciences
128.0
497.7
1/26/2018
Redwood City
California
Pharma & Biotech
Company
Exit size ($M)
Acquirer(s)
Date
HQ
State
Industry
Ring
1,200.0
Amazon
(NASDAQ: AMZN)
2/27/2018
Santa Monica
California
Other
ThreatMetrix
811.4
RELX Group (LSE: RELX)
2/22/2018
San Jose
California
Software
LiquidHub
494.4
Capgemini (PAR: CAP)
2/5/2018
Wayne
Pennsylvania
Commercial Services
Cofense
400.0
BlackRock, Pamplona
Capital Management
2/26/2018
Leesburg
Virginia
Software
Einfochips
283.1
Arrow Electronics
(NYSE: ARW)
1/9/2018
San Jose
California
Commercial Services
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
PitchBook-NVCA Venture Monitor
34
1Q 2018 PITCHBOOK-NVCA VENTURE MONITOR
US VC activity by state &
territory
US VC activity by Metropolitan
Statistical Area (MSA)
State
District
Deal Count
California
District 12
125
New York
District 12
70
California
District 18
61
California
District 14
44
New York
District 10
41
Washington
District 7
38
Massachusetts
District 7
24
California
District 17
22
California
District 33
20
California
District 52
19
Colorado
District 2
17
Illinois
District 7
17
Massachusetts
District 8
17
California
District 13
15
California
District 28
14
Texas
District 21
14
California
District 49
13
Massachusetts
District 5
13
Colorado
District 1
12
California
District 37
11
Pennsylvania
District 14
11
California
District 45
10
New York
District 7
10
Ohio
District 11
9
California
District 2
8
Georgia
District 11
8
Indiana
District 5
8
Minnesota
District 3
8
North Carolina
District 6
8
Virginia
District 11
8
Virginia
District 8
8
California
District 19
7
Georgia
District 6
7
Maryland
District 8
7
Massachusetts
District 4
7
Pennsylvania
District 2
7
US VC activity by
Congressional District
State
Deal
Count
Deal Value
($M)
California
586
$16,225.3
New York
226
$2,736.4
Massachusetts
131
$2,757.5
Texas
79
$677.5
Illinois
57
$350.0
Colorado
56
$305.1
Washington
55
$621.3
Pennsylvania
44
$555.8
Florida
41
$1,083.4
North Carolina
38
$430.9
Maryland
32
$525.4
Virginia
28
$180.2
Utah
28
$247.0
Ohio
22
$122.8
Minnesota
22
$50.2
Indiana
18
$96.2
New Jersey
17
$357.7
Oregon
17
$64.3
Georgia
16
$45.6
Arizona
14
$40.5
Michigan
14
$79.1
Connecticut
12
$93.7
Tennessee
11
$22.4
Wisconsin
11
$24.6
Kentucky
10
$15.4
Missouri
10
$61.2
Idaho
7
$10.5
South Carolina
7
$69.4
Iowa
7
$24.2
Delaware
7
$27.2
Nevada
7
$12.9
Montana
7
$45.1
New Hampshire
7
$28.0
MSA
Deal Count
San Francisco-Oakland-
Fremont, CA
303
New York-Northern New Jersey-
Long Island, NY-NJ-PA
226
Boston-Cambridge-
Quincy, MA-NH
131
Los Angeles-Long Beach-
Santa Ana, CA
119
San Jose-Sunnyvale-
Santa Clara, CA
100
Chicago-Naperville-
Joliet, IL-IN-WI
52
Seattle-Tacoma-Bellevue, WA
49
Austin-Round Rock, TX
41
San Diego-Carlsbad-
San Marcos, CA
37
Washington-Arlington-
Alexandria, DC-VA-MD-WV
37
Philadelphia-Camden-
Wilmington, PA-NJ-DE-MD
30
Denver-Aurora, CO
26
Miami-Fort Lauderdale-
Pompano Beach, FL
25
State
Deal
Count
Deal Value
($M)
District of Columbia
6
$17.8
Alabama
6
$13.2
Kansas
5
$110.6
Arkansas
5
$5.3
Maine
4
$7.6
Oklahoma
4
$44.4
Louisiana
3
$9.6
New Mexico
3
$13.3
Mississippi
3
$7.2
Hawaii
2
$9.6
Vermont
2
$2.6
Rhode Island
2
$10.2
Nebraska
1
$0.8
Alaska
1
$0.2
West Virginia
1
$4.6
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
1Q 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
investment strategy. PitchBook’s
data will also bolster our
year-in-review publication.
The PitchBook Platform
Help us help you
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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
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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
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Our members get 10% off a new subscription
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If your firm was a PitchBook client prior
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one of these discounts the next time you
renew your contract.
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.
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