U.S. Venture Capital Market Continues Strong Performance in Q3 2017

A Quarterly Wink and a Glance at Venture Capital

U.S. venture capital investing in Q3 2017 was almost identical to Q2 in terms of total funding and number of deals. Q3 saw $19B deployed in 1,207 companies. The number of deals was down 6% from Q3 2016, but the dollars invested was up a noteworthy 32% for the same time period. Globally, $42B was invested in 2,645 deals in Q3. This represents a 4% decline in funding from Q2. During Q3, 11 private companies reached the unicorn valuation of $1B. Five of these companies were located in North America, and six were located in Asia.

Later-Stage Deals Continue To Be Strong

The later stage (defined as Series C and later) was very strong in Q3 and included 225 U.S. companies receiving $11.6B. This was up from $11B invested in Q2 and $9.5B invested in Q3 2016. Sectors receiving the most later-stage dollars were transportation, medical devices and online services. In Q3, later-stage investment recorded its highest level in five quarters in terms of both number of deals and dollars invested.

Seed- and Early-Stage Funding Is Lower

Seed-stage companies raised $892M in Q3, which is down from $995M in Q2 and the $1B raised in Q3 2016. Series A and B funding topped $8B in Q3, which is a slight increase from Q2 2017 and Q3 2016.

Outlook

Significant capital is being invested by VCs; however, there is some concern regarding exits. With all the later-stage capital being invested, companies now have more time to grow and achieve the performance that corporate buyers and public market investors favor. With the availability of later-stage capital, IPOs and acquisitions can now be postponed, resulting in VCs having to wait longer for returns. Let’s see if the strong venture capital activity continues into the final quarter of 2017.