Venture Capital Report

Transcription

1 Venture Capital Report U.S. 1Q 2018

2 The following report presents Dow Jones VentureSource s quarterly findings for U.S. venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market. Highlights for 1Q 2018 include: U.S. venture capital fundraising increased in amount invested and in number of funds Venture capital investment into U.S. companies reached the highest level of the last three years Amount raised through initial public offerings (IPOs) decreased in the first quarter of 2018, mergers and acquisitions (M&As) also fell compared to the previous quarter 2

3 GROWTH EQUITY Starting this quarter, we are reporting on Growth Equity. VentureSource has always tracked this space, but until now they were excluded from the quarterly statistics. Please note that Growth deals will be included in the Later Stage category, a subsection of Venture Capital Investment. We define Growth Equity as a minority stake investment in privately owned, mature companies that meet the following criteria: No prior equity investment within the first 3 years of business operations; and A proven business model -- generating revenue or profitable; and No VC-type round series is used by the company to label the transaction; and At least one institutional investor participated in the deal. We recently reviewed our entire database to ensure that all companies and transactions are classified consistent with the above criteria. As a result of this review, we re-characterized thousands of historical deals from VC to Growth, or from Growth to VC. As with our Venture Capital statistics, we exclude companies formed for the sole purpose of acquiring other companies, properties, natural resources, or interests. We also exclude companies formed or owned by private equity firms. 3

4 VENTURE FUNDRAISING INCREASES IN U.S. DURING 1Q 2018 FUNDRAISING 140 venture capital funds collected $8.78 billion in 1Q 2018, a 68% increase in the amount raised, along with a 2% growth in the number of funds from the prior quarter. Norwest Venture Partners XIV LP was the largest U.S. venture capital fund of 1Q 2018, raising $1.5 billion and accounting for 17% of the total venture capital financing raised during the quarter U.S. VC Fundraising ( ) Based on multiple closings $16.00 $14.00 $12.00 $10.00 $8.00 $ $ $ Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Amount Raised ($B) $9.03 $13.75 $5.76 $9.14 $14.35 $11.91 $8.78 $9.43 $8.19 $14.37 $9.85 $5.21 $8.78 Number of Funds $- 4

5 LARGEST VC FUNDS RAISED IN 1Q 2018 FUNDRAISING Firm Name Fund Name Amount ($M) City State Offering Status Fund Type Fund Category Closing Type Norwest Venture Partners Norwest Venture Partners XIV LP $1, Palo Alto CA Closed Multi-stage venture capital Venture Capital Final General Catalyst Partners General Catalyst Group IX LP $1, Cambridge MA Closed Multi-stage venture capital Venture Capital Final Battery Ventures Battery Ventures XII LP $ Boston MA Closed Multi-stage venture capital Venture Capital Final Ampersand Capital Partners Ampersand 2018 LP $ Wellesley MA Closed Multi-stage venture capital Venture Capital Final Samsara BioCapital Samsara BioCapital LP $ Palo Alto CA Open Multi-stage venture capital Venture Capital First 5

6 U.S. EQUITY INVESTMENT IN 1Q 2018 INCREASES FINANCING U.S.-based companies raised $25.72 billion in 1303 equity deals in 1Q 2018, which translates to an increase of 17% in capital raised from the fourth quarter of 2017, with a 9% increase in number of deals during the same period. Healthcare received the highest amount of investment, accounting for 26.62% and growing 21% from the last quarter. Compared to the same period last year, there was a slight increase of 4%. Equity financing this quarter was the highest in the last three years. When measured against the same period last year, total capital invested rose by 30%. $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 Equity Financings into U.S.- Based, VC-backed Companies ( ) 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Amount Raised ($B) $19.80 $23.15 $23.50 $23.53 $16.24 $20.36 $18.80 $13.62 $19.76 $20.93 $23.32 $21.66 $25.72 Number of Deals

7 EQUITY FINANCINGS INTO U.S. BASED, VC BACKED COMPANIES, BY ROUND CLASS (QUARTER OVER QUARTER, ) FINANCING Number of Deals Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Restart Later Second First Seed

8 EQUITY FINANCINGS INTO U.S.-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (QUARTER OVER QUARTER, ) FINANCING Amount Raised ($B) $18.00 $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Restart $0.03 $0.09 $0.06 $0.02 $0.06 $0.04 $0.54 $0.01 $0.08 $0.01 $0.05 $0.00 $0.03 Later $13.20 $15.52 $15.35 $16.60 $10.31 $10.63 $12.01 $7.66 $10.71 $12.86 $14.69 $13.52 $14.30 Second $3.12 $3.66 $3.70 $3.01 $2.25 $2.72 $2.37 $2.19 $3.90 $3.07 $3.50 $3.07 $4.23 First $2.12 $2.42 $2.57 $2.78 $2.09 $2.26 $2.93 $1.95 $3.64 $2.90 $2.13 $2.77 $4.25 Seed $0.08 $0.11 $0.09 $0.12 $0.13 $0.10 $0.10 $0.13 $0.16 $0.34 $0.32 $0.33 $0.32 8

9 EQUITY FINANCINGS INTO U.S.-BASED, VC-BACKED COMPANIES, MEDIAN DEAL SIZE ($M) ( ) FINANCING Median Equity Deal Size ($M) $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Median Equity Deal Size ($M) $5.00 $5.00 $5.09 $5.00 $4.60 $4.83 $5.00 $5.00 $5.00 $5.60 $5.31 $6.00 $6.30 9

10 EQUITY FINANCINGS INTO U.S.-BASED, VC-BACKED COMPANIES, BY INDUSTRY GROUP (1Q 2018) FINANCING Healthcare received the largest investment allocation during 1Q 18 (27% of total), accumulating $6.85 billion through 250 deals. While the number of deals decreased in this quarter compared with 4Q 17, the amount invested in healthcare rose 21%. 1Q'18 Industry Breakdown By Number of Deals Business and Financial Services Consumer Goods Consumer Services Energy & Utilities Healthcare Business and Financial Services took second place with $5.89 billion across 321 deals. Compared to the performance of this sector in the last quarter, the Industrial Goods & Materials Information Technology numbers signify a 15% increase in deal flow along with a substantial rise of 39% in the amount raised. The sector s investment figure represents approximately 23% share of total equity investment into U.S. VC-backed companies for the quarter. Information Technology placed third this quarter in terms of equity financing, accounting for 21% of all 1Q 18 investment. The 377 deals drew $5.32 billion, a mere 4% increase in capital raised compared to the previous quarter. 1Q 18 Industry Breakdown By Amount Raised ($B) 5% 21% 27% 0% 23% 6% 18% Business and Financial Services Consumer Goods Consumer Services Energy & Utilities Healthcare Industrial Goods & Materials Information Technology 10

11 TOP 5 DEALS INTO VC-BACKED COMPANIES (1Q 2018) FINANCING Co. Name Location Industry Code Industry Segment Industry Group Brief Description Close Date Round Type Raised ($M) Uber Technologies Inc. San Francisco, CA Transportation Services Travel and Leisure Consumer Services Provider of an ondemand ridesharing service. 1/18/2018 VC Later 1, Round Investors (* denotes lead) TPG Capital LP, Tencent Holdings Ltd., Softbank Group Corp.*, Sequoia Capital, Dragoneer Investment Group Katerra Inc. Menlo Park, CA Building Construction Construction and Civil Engineering Business and Financial Services Provider of services and solutions for the construction industry. 1/24/2018 VC 2nd SoftBank Vision Fund* DoorDash Inc. San Francisco, CA Restaurants/ Food Service Travel and Leisure Consumer Services Provider of an ondemand delivery service that connects customers with local businesses. 3/1/2018 VC 5th Wellcome Trust Ltd., Softbank Finance Group*, Sequoia Capital, GIC Private Ltd. Moderna Therapeutics Inc. Cambridge, MA Biotechnology Therapeutics Biopharmaceuticals Healthcare Developer of messenger RNA (mrna) therapeutics and vaccines. 2/1/2018 VC 6th Viking Global Investors LP, Sequoia Capital, Pictet Asset Management SA, Julius Baer, Fidelity Management & Research Co., EDBI Pte. Ltd., BB Biotech Ventures, ArrowMark Partners, Alexandria Venture Investments Magic Leap Inc.* Dania Beach, FL Displays Electronics and Computer Hardware Information Technology Developer of an augmented reality visual computing system. 3/7/2018 Other Equity Saudi Arabia Public Investment Fund* *According to WSJ Pro VC, the company had a second closing of a Series D round after reporting in October a $502 million round lead by Temasek. Venture Source Data reported on this financing in the previous quarter. 11

12 MOST ACTIVE INVESTORS FOR U.S.-BASED, VC-BACKED COMPANIES (1Q 2018) FINANCING New Enterprise Associates Inc. Y Combinator Khosla Ventures Andreessen Horowitz GV Greycroft Partners 12

13 NUMBER OF DEALS/AMOUNT RAISED BY PRIMARY REGION (1Q 2018) FINANCING Number of Deals by Primary Region Amount Raised ($B) by Primary Region Number of Deals in 1Q 2018 by Primary Region Mid-Atlantic Midwest Central Midwest East Mountain New England Northern California 1Q Q 2018 Pacific Northwest South Central Mid-Atlantic Midwest Central Midwest East Mountain New England Northern California Pacific Northwest South Central South East Southern California $4.28 $0.39 $0.91 $0.95 $2.55 $10.58 $0.72 $0.99 $1.39 $2.95 Amount Raised ($B) in 1Q 2018 by Primary Region South East Southern California Mid-Atlantic Midwest Central Midwest East Mountain New England Northern California Pacific Northwest South Central South East Southern California 13

14 NUMBER OF DEALS/AMOUNT RAISED BY SUBREGION (1Q 2018) FINANCING Number of Deals by Subregion Number of Deals by subregion 1Q 2018 Amount Raised ($B) by subregion 1Q 2018 Austin Metro 27 $0.47 Boston Metro 91 $2.51 Chicago Metro 39 $0.59 Dallas-Fort Worth 13 $0.25 Los Angeles Metro 84 $1.99 New York Metro 186 $3.16 Orange County 24 $0.30 Potomac 34 $0.57 San Diego Metro 21 $0.51 San Francisco Bay Area 405 $10.56 Seattle Metro 39 $0.59 Subregion Breakout Number of Deals Seattle Metro San Francisco Bay Area San Diego Metro Potomac Orange County New York Metro Los Angeles Metro Dallas-Fort Worth Chicago Metro Boston Metro Austin Metro Seattle Metro San Francisco Bay Area Subregion San Diego Metro Breakout Potomac Amount Orange County Raised ($B) New York Metro Los Angeles Metro Dallas-Fort Worth Chicago Metro Boston Metro Austin Metro $0.59 $0.51 $0.57 $0.30 $0.25 $0.59 $ $3.16 $1.99 $ Amount Raised ($B) by subregion $

15 VENTURE M&A AND IPO MARKET ACTIVITY IN THE U.S. DURING 1Q 2018 LIQUIDITY Exit Opportunities for U.S. VC backed Companies ( ) Mergers and acquisitions (M&As) for venture-backed companies decreased 6% in value from 4Q 2017, with 120 deals garnering $17.31 billion. During the same period, the number of IPOs declined by 39%, as did the total amount raised. The latter experienced a 19% decrease, falling to $1.63 billion. 1Q'18 4Q'17 3Q'17 2Q'17 1Q'17 4Q'16 3Q'16 2Q'16 1Q'16 4Q'15 3Q'15 2Q'15 1Q' Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 IPOs M&As

16 U.S. VC-BACKED M&As ( ) LIQUIDITY U.S. VC-backed M&A Activity ( ) 120 M&As of venture-backed companies in the U.S. amounted to $17.31 billion during 1Q Compared to 4Q 2017, when a total of 156 transactions accumulated $18.40 billion, both number of deals and amount raised decreased by 23% and 6%, respectively. The largest M&A of the quarter was IO Data Centers LLC, which was acquired by Iron Mountain Inc. (NYSE: IRM) for $1.34 billion. $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $- 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Amount Paid ($B) $15.66 $11.88 $19.71 $19.56 $24.01 $26.17 $25.89 $22.17 $23.24 $20.08 $22.10 $18.40 $17.31 Number of M&As

17 TOP 3 U.S. M&As (1Q 2018) LIQUIDITY Company Name Location Brief Description Industry Code Industry Segment Industry Group Close Date Round Type Amount Paid ($M) Acquirer IO Data Centers LLC Phoenix, AZ Provider of wholesale data center and colocation services. Data Management Services Business Support Services Business and Financial Services 1/10/2018 Acquisition $1, Iron Mountain Inc. (NYSE: IRM) Impact San Diego, CA Biomedicines Inc.* Developer of treatments for patients with myeloproliferative neoplasms and other types of cancer. Biotechnology Therapeutics Biopharmaceuticals Healthcare 3/31/2018 Acquisition $1, Celgene Corp. (NASDAQ: CELG) Bot Home Automation Inc. Santa Monica, CA Provider of a wireless video camera doorbell security device. Security Products Aerospace and Defense Industrial Goods and Materials 2/27/2018 Acquisition $1, Amazon.com Inc. (NASDAQ: AMZN) *The company was acquired for $1.1 billion upfront and up to $ 1.25 billion in contingent payments based on regulatory approval milestones for myelofibrosis. 17

18 U.S. VC-BACKED IPOs ( ) LIQUIDITY U.S. VC-backed IPO Activity ( ) 14 venture-backed companies raised $1.63 billion through public offerings in 1Q Both number of deals and capital raised experienced a significant drop from the last quarter, 39% and 19%, respectively. Despite the decline, Dropbox Inc. s IPO raised almost twice as much as last quarters biggest IPO. The company, now quoted in the Nasdaq Stock Exchange under the DBX ticker symbol, collected $ million and was valued at $8.33 billion. $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $ $- 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 Raised ($B) through IPO $0.93 $2.57 $1.60 $1.36 $0.38 $0.79 $0.99 $0.69 $3.95 $1.75 $0.62 $2.02 $1.63 Number of IPOs

19 TOP 3 U.S. IPOs (1Q 2018) LIQUIDITY Company Name Location Brief Description Industry Code Industry Segment Industry Group Close Date Round Type Raised through IPO ($M) Exchange Dropbox Inc. San Francisco, CA Provider of cloud storage services. Business Applications Software Software Information Technology 3/23/2018 IPO $563 Nasdaq: DBX Zscaler Inc. San Jose, CA Provider of multi-tenant software-as-a-service (SaaS) security services. Network / Systems Management Software Software Information Technology 3/16/2018 IPO $192 NASDAQ: ZS Homology Medicines Inc. Bedford, MA Developer of gene editing and gene therapy technologies. Biotechnology Therapeutics Biopharmaceuticals Healthcare 3/27/2018 IPO $144 NASDAQ: FIXX 19

20 ABOUT US Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and partnership opportunities, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It provides accurate, comprehensive data on venture-backed companies including their investors and executives in every region, industry and stage of development throughout the world. The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in VentureSource. This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. These venture capital statistics cover equity investments into early stage, innovative companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. Figures contained throughout the report current at time of editorial but are subject to change without notice. No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice. 20

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