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The U.S. venture capital market showed modest Q2 growth and the IPO markets are coming back to   life.

U.S. Venture Capital Market Shows Modest Q2 Growth

A Quarterly Wink and a Glance at Venture Capital

Q2 2017 showed an increase from Q1 in terms of venture capital dollars invested; however, the number of companies receiving funding remained relatively stable. Q2 saw $21.8B deployed in 1,958 companies, compared to total capital deployed of $16.5B in Q1. The top 10 deals in Q2 accounted for nearly 20% of total dollars invested. In fact, 34 financings of at least $100M were completed in the quarter, compared to only 12 in Q1. The number of first-time funding rounds has continued to decline, with the number of angel and seed stage deals declining for the last eight quarters.

IPO Markets Comes Back to Life

The number of venture-backed IPOs completed in the first half of 2017 totaled 27. This is an impressive number, considering the slow start that the IPO market had in 2017. There have been five unicorn IPOs already this year as well as a very strong pipeline of companies in the registration process. We’re closely following to see if the IPO values are above or below the last private funding round.

Later Stage Deals Continue to Increase

With the number of angel, seed, and early-stage deals on the decline, later-stage deals are certainly on the rise. The number of late-stage deals has increased for the last three quarters. It appears companies now prefer to continue to use private capital, rather than cashing out through an IPO or a sale to a strategic buyer. Continuing to use private capital is certainly becoming an issue for both investors and LPs, since they are looking for return of capital for their investments.

About Alan Wink

Mr. Wink assists clients with capital budgeting, capital structuring and capital sourcing. He has worked with many tech and life science companies on developing the appropriate capital structure for their position in the business life cycle.

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