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Tech Talk: VC Hot Streak Continues

2018-07-18T10:34:08+00:00July 18th, 2018|

Our friends at TechPoint recently shared a summary of the strong investment activity that took place with Indiana tech companies in the second quarter of the year.

Nationally, here are some of the venture capital highlights for the first half of 2018, which is shaping up as an excellent year. The numbers are from the PitchBook-NVCA Venture Monitor and the analysis from the State Science & Technology Institute.

Investment in 3,912 venture-backed companies reached $57.5 billion invested across 3,997 deals in the first half of 2018. That total already exceeds the full-year total for six of the past 10 years.

Through the first half of 2018, VC-backed unicorns have attracted more than $11.8 billion in investments – more than 20% of total VC financing. On the other end of the capital continuum, the median deal size for angel/seed stage deals has increased from $1 million in 2017 to $1.4 million through the first half of 2018, which puts it on pace to creep back towards 2015’s record highs after two years of decline.

In 2018, the median age of a company in the angel/seed stage rose to 3.11 years, up from 2.4 years in 2017. In comparison, in 2008, the median age of a company receiving an angel/seed stage deal was less than two years old. The trend of older start-ups entering the VC lifecycle also has impacts on other series investments. The median age of a company receiving series A increased from approximately two years old in 2008 to 3.9 years old in 2018. For Series B companies, the median age increased from less than four years in 2008 to 5.2 years old in 2018.

While dollars invested continues to grow, PitchBook’s findings highlight the likely continuation of a decline in the total number of deals made – a trend that started in 2016.

A rebounding IPO market also will keep this thriving VC market barreling forward. While M&A activity has declined slightly, 2Q 2018 was the fifth consecutive quarter with 10 or more venture-backed IPOs.

The first half of 2018 saw the continuation of several other trends, including:
• Early-stage investing continues to climb higher, recording a seventh straight quarterly increase in capital invested
• Median fund size continues to increase, reaching a 10-year high of $65 million
• Fund sizes are trending larger with over 50% of funds having at least $50 million dollars raised
• Since 2016, buyouts have been on a rapid increase with the median buy reaching $162 million – up from approximately $40 million in 2015
• Corporate VC participation in venture deals has continued at a brisk pace in 2Q, with total deal value topping $13.5 billion