Venture capital investment in 2017 reached a record level of $84.24 billion, according to KPMG’s Venture Pulse Report, summarizing the final quarter of 2017 and the totals for the year. While deal volume declined, total investment dollars soared due to investors funding larger amounts on a smaller base of companies—primarily focusing on those who have solid paths to profitability.
The fourth quarter of 2017 contributed significantly to the record making year, due in part to the closing of three $1 billion plus megadeals. Total deal value in the U.S. during Q4’17 rose to $23.75 billion, up from $21.24 billion of the previous quarter on fewer deals of 1778 in Q4’17 versus the prior quarter’s 1997. In the U.S. there were numerous $100 million plus rounds and the top 10 deals accounted for more than one quarter of the total investment during the quarter,
“In 2018, we expect VC activity in the U.S. to build off the optimism and momentum that has returned to the U.S. and global markets,” said Brian Hughes, national co-lead partner, KPMG LLP’s Venture Capital Practice in the U.S. “This should also be helped by stronger exit markets in both IPO’s and M&A activity for VC backed companies.”
The Report highlighted key venture capital activities:
- Investors focused on late stage deals in 2017 contributing to a significant decrease in the number of angel & seed deals, with the latter dropping to 47 percent of all deals during 2017 compared to well over 50 percent in previous years.
- Healthtech and biotech investment was strong in the U.S. as a result of several large deals completed in Q4’17. Healthcare companies led in exits that helped spur more activity overall.
- Q4 median pre-money valuation for all US Series D or later VC deals reached $250 million in 2017, a dramatic jump from the $135 million in 2016.
- Three U.S.-based companies had $1 billion plus funding rounds including: Lyft ($1.5 billion), Grail Technology ($1.2 billion) and Faraday Future ($1 billion)
“While there is no indication that we will return to the level of IPO activity we saw in 2015, there is a likelihood that 2018 will see an increased number of IPOs. However, the secondary market is poised to see even greater growth as many companies choose to remain private for longer.” commented Conor Moore, national co-lead partner, KPMG Venture Capital practice in the U.S. in the Report’s announcement.
