In Q1 2017, investors deployed
“We are starting to see a rise in VC investments after the lowest level of investing in the last two years, with later series deals supporting broad anticipation of increased exit activity,” said
Regional trends were mixed, with LA/
Globally, funding trends directionally tracked US investment with total dollars rising 21% from Q4 2016 lows to
“We are seeing the US funding environment slip into its new normal. 2015 was irrationally exuberant and the 2016 pullback was a reaction to that,” stated
Key Q1 2017 highlights:
- US mega-round activity (rounds over
$100 millionin size) rebounded from a five-quarter low in Q4 2016, with 17 total, compared to last quarter’s 12.
- Three new VC-backed unicorns, or private companies valued at
$1 billionor more, were minted in the US during Q1 2017. The quarterly unicorn creation rate has not exceeded five since Q4 2015, and remains a fraction of the 16 birthed in Q3 2015.
- A few outsize financings propelled
Silicon Valley( South Bay Area) funding to over $2.7 billion, the second-highest quarterly total of the past two years. However, the 113 deals in the region were essentially flat from the eight-quarter low of 109 in Q4 2016.
- Meanwhile, in
San Francisco( North Bay Area), quarterly deals hit a two-year low of 212, although established unicorns saw several rounds of $400 millionor more, boosting funding 21% from Q4 2016. New Englanddeals sank to an eight-quarter low of 109, although several larger financings lifted funding 37% from Q4 2016 to $1.9 billion. By contrast, New YorkMetro saw deal count rising 9% from the prior quarter to 154, although quarterly funding fell 20% to an eight-quarter low in the absence of mega-round activity.
- Seed activity as a proportion of all US deals continued its two-year decline, reaching a low of 25% of all US deals in Q1 2017, down from 35% in Q3 2015. Meanwhile, later-stage deal share climbed to a high of 11%.
- In sector terms,
Internetquarterly deal share dropped to a two-year low of 44% in the quarter, while Healthcare jumped to a two-year high of 17% as it displaced Mobile & Telecom as the second-place sector in terms of deal activity.
- Artificial Intelligence financing continued rising to an eight-quarter high, with
$820 milliondeployed across 90 deals. Quarterly funding to US AI companies has now topped $500 millionin seven of the past eight quarters. Digital Healthdeal activity slid 23%, while Cybersecurity deals and dollars rose in Q1 2017 after crashing at the end of 2016.
- In Q1 2017, international sources of capital represented a quarter of active investors in later-stage deals to US companies.
- Globally, total funding worldwide stood at
$27.1 billionspread over 2,228 deals, respectively up 21% and 2% from Q4 2016. Europesaw deal activity growth for the fifth-consecutive quarter, while Asiafunding jumped 58% from the low of Q4 2016 as larger financings helped drive investment totals upwards.
MoneyTree Report results are available online at www.pwcmoneytree.com.
CB Insights research can be found online here.
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SOURCE PwC US; CB Insights