Venture Capital Report - Dow Jones & Company · 1/8/2019 · VENTURE CAPITAL REPORT The following...
Transcript of Venture Capital Report - Dow Jones & Company · 1/8/2019 · VENTURE CAPITAL REPORT The following...
V E N T U R E C A P I T A L R E P O R T
Venture Capital Report
U . S . | 1 Q | 2 0 1 9
V E N T U R E C A P I T A L R E P O R T
VENTURE CAPITAL REPORT
The following report presents Dow Jones VentureSource’s quarterly findings for U.S. venture capital investment, fundraising, and liquidity. The
included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.
Highlights for 1Q 2019 include:
• The total amount of equity investment was the third-largest on record, exceeded only by the previous two quarters.
• Deal flow declined for the third quarter in a row, something that only occurred twice before – during the 2008-2009 financial crisis, and the
bursting of the dot-com bubble. Whether this is a statistical anomaly or a harbinger of things to come remains to be seen.
• Median deal sizes surged to $7 million, the highest figure in 11 years.
• VC fundraising experienced its third-best quarter on record, and unlike the equity deal flow, the number of fund closings also remained high.
• While the M&A market had another strong quarter, the number of IPOs declined sharply for the third consecutive quarter. However, due to
Lyft’s IPO (the third-largest for any U.S. VC-backed company on record), the total amount raised at IPO increased from 4Q.
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V E N T U R E C A P I T A L R E P O R T
EQUITY FUNDING REMAINS AT HIGH LEVELS, DEAL COUNT CONTINUES TO DECLINE
The situation in 1Q presents a complicated picture. While
total equity funding fell 26% from 4Q’s record-breaking
figure, the $31.5 billion raised still ranks as the third-
highest quarterly total on record. Also, once the
anomalous $12.8 billion investment for Juul Labs is
subtracted, the most recent three quarters saw
consistent levels of funding, around $30-33 billion
apiece.
Potentially more concerning is the sustained drop in deal
flow – so far, down 23% from 2Q 2018. The 1,234 deals
recorded in 1Q is not only the lowest quarterly total since
4Q 2013, but it is also the third consecutive quarter with
a decrease in deal counts.
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FINANCING
Equity Financings in U.S.-Based,
VC-Backed Companies (2016–2019)
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Amount Raised ($B) $16.60 $19.55 $19.70 $14.31 $19.65 $21.51 $24.14 $22.19 $27.45 $28.67 $32.57 $42.80 $31.50
Number of Deals 1346 1351 1410 1274 1476 1507 1479 1365 1598 1600 1505 1432 1234
0
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400
600
800
1000
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1600
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$35.00
$40.00
$45.00
V E N T U R E C A P I T A L R E P O R T
TOP ROUNDS FOR VC-BACKED COMPANIES (1Q 2019)
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FINANCING
Company Name Location Industry Code Industry Segment Industry Group Brief Description Close Date Round Type Raised ($M)Round Investors
(* denotes lead)
WeWork
Companies Inc.
New York,
NY
Facilities/
Operations
Management
Business
Support Services
Business and
Financial
Services
Provider of shared
office space.1/8/2019
Corporate
Equity$4,000.00 Softbank Group Corp.
Flexport Inc.San Francisco,
CA
Logistics/
Delivery Services
Wholesale Trade
and Shipping
Business and
Financial
Services
Provider of global
logistics and import-
export concierge
services.
2/21/2019 VC 5th $1,000.00
Susa Ventures; SoftBank Vision Fund*; SF Express
Co. Ltd.; Founders Fund LLC; DST Global; Cherubic
Ventures
Verily Life
Sciences LLC
South San
Francisco,
CA
Medical Devices
and Equipment:
Other
Medical Devices
and EquipmentHealthcare
Provider of tools and
devices for gathering
and organizing
health data.
1/3/2019 VC 2nd $1,000.00Silver Lake Management LLC*; Ontario Teachers'
Pension Plan Board
Nuro Inc.
Mountain
View,
CA
AutomobilesVehicles and
Parts
Consumer
Goods
Provider of robotic
delivery vehicles.2/11/2019 VC 2nd $940.00 SoftBank Vision Fund*
Aurora
Innovation Inc.
Palo Alto,
CA
Vehicles and
Parts: Other
Vehicles and
Parts
Consumer
Goods
Developer of self-
driving car software
and hardware.
2/7/2019 VC 2nd $530.00
T. Rowe Price Group Inc.; Shell Ventures LLC; Sequoia
Capital*; Reinvent Capital; Lightspeed Venture
Partners; Index Ventures; Greylock Management
Corporation; Geodesic Capital; Amazon.com Inc.
V E N T U R E C A P I T A L R E P O R T
BUSINESS SERVICES & HEALTHCARE EMERGE AS WINNERS IN 1Q
VC investors spread their attention across a wider range of sectors
than in the previous quarter. Leading the pack in terms of money
raised was the Business & Financial Services group, with $10.63
billion secured in 257 deals. WeWork and Flexport represented this
industry among the quarter’s top deals, taking first and second place
with $4 billion and $1 billion, respectively.
Healthcare companies secured the next largest share of funding,
with $6.7 billion spread across 263 deals. The top deal within this
space was for Verily Life Sciences, which received $1 billion in its
2nd round.
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FINANCING
1Q 2019
Industry
Breakdown
By Number
of Deals
1Q 2019
Industry
Breakdown
By Amount
Raised ($B)
257
82
154
8263
40
425
Business & Financial Services
Consumer Goods
Consumer Services
Energy & Utilities
Healthcare
Industrial Goods & Materials
Information Technology
34%
10%
12%0.2%
21%
3%
20%
Business & Financial Services
Consumer Goods
Consumer Services
Energy & Utilities
Healthcare
Industrial Goods & Materials
Information Technology
V E N T U R E C A P I T A L R E P O R T
MOST ACTIVE INVESTORS FOR U.S.-BASED, VC-BACKED COMPANIES (1Q 2019)
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FINANCING
27
2322
2019 19
14
12 12 12
0
5
10
15
20
25
30
New EnterpriseAssociates
GV Alumni VenturesGroup
Norwest VenturePartners
Sequoia Capital Y Combinator Battery Ventures Alexandria VentureInvestments
Canaan Partners Founders Fund
V E N T U R E C A P I T A L R E P O R T
NUMBER OF DEALS/AMOUNT RAISED BY METRO REGION (1Q 2019)
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FINANCING
Metro Region Breakout
Number of Deals
Metro Region Breakout
Amount Raised ($B)
18
22
26
35
36
39
43
55
101
204
349
Orange County
Dallas-Fort Worth
San Diego
Austin
Potomac
Chicago
Seattle
Los Angeles
Boston
New York
San Francisco Bay Area
Number of Deals by Metro Region
$0.27
$0.27
$0.31
$0.39
$0.43
$0.47
$0.81
$1.23
$2.60
$7.68
$13.88
San Diego
Orange County
Dallas-Fort Worth
Chicago
Potomac
Seattle
Austin
Los Angeles
Boston
New York
San Francisco Bay Area
Amount Raised ($B) by Metro Region
V E N T U R E C A P I T A L R E P O R T
NUMBER OF DEALS/AMOUNT RAISED BY PRIMARY REGION (1Q 2019)
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FINANCING
Number of
Deals in 1Q
2019
by Primary
Region
Amount Raised
($B) in 1Q
2019
by Primary
Region
Number of Deals
by Primary Region
1Q 2019
296
22
94
57
115
353
55
71
65
103
Mid-Atlantic
Midwest Central
Midwest East
Mountain
New England
Northern California
Pacific Northwest
South Central
South East
Southern California
Amount Raised ($B)
by Primary Region
1Q 2019
$8.73
$0.30
$0.64
$0.66
$2.68
$13.90
$0.61
$1.27
$0.69
$2.02
28%
1%2%
2%
9%44%
2%4%
2%6%
Mid-Atlantic
Midwest Central
Midwest East
Mountain
New England
Northern California
Pacific Northwest
South Central
South East
Southern California
24%
2%
8%
5%
9%29%
4%
6%
5%8%
Mid-Atlantic
Midwest Central
Midwest East
Mountain
New England
Northern California
Pacific Northwest
South Central
South East
Southern California
V E N T U R E C A P I T A L R E P O R T
MEDIAN DEAL SIZE FOR EQUITY FINANCINGS IN U.S. COMPANIES
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FINANCING
Median Equity Deal Size ($M)
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Median Equity Deal Size ($M) $4.08 $4.00 $4.10 $4.18 $4.50 $5.00 $4.85 $5.30 $5.29 $6.40 $5.60 $6.40 $7.00
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
V E N T U R E C A P I T A L R E P O R T
Number of Deals
COUNT OF EQUITY FINANCINGS IN U.S. COMPANIES, BY ROUND CLASS
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FINANCING
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Seed 126 102 124 124 157 182 170 156 172 193 177 130 84
First 365 370 381 350 353 374 307 283 346 389 309 343 299
Second 226 239 213 195 229 208 234 191 243 229 218 177 204
Later 422 413 459 374 443 401 414 401 477 454 450 432 376
Restart 4 4 4 1 6 2 4 0 2 0 4 0 2
0
50
100
150
200
250
300
350
400
450
500
V E N T U R E C A P I T A L R E P O R T
Amount Raised ($B)
AMOUNT RAISED IN U.S. COMPANIES, BY ROUND CLASS
1 1
FINANCING
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Seed $0.22 $0.19 $0.17 $0.24 $0.29 $0.43 $0.39 $0.39 $0.45 $0.52 $0.55 $0.46 $0.24
First $2.29 $2.40 $3.24 $2.27 $3.52 $3.40 $2.30 $3.63 $4.54 $4.27 $4.87 $4.97 $3.08
Second $2.24 $2.89 $2.48 $2.09 $4.09 $3.07 $3.95 $3.18 $4.88 $3.64 $5.00 $3.11 $7.48
Later $10.22 $9.46 $11.56 $7.59 $10.09 $12.50 $14.64 $12.85 $14.95 $17.23 $17.71 $17.38 $13.82
Restart $0.06 $0.04 $0.55 $0.01 $0.08 $0.06 $0.04 $0.00 $0.03 $0.00 $0.04 $0.00 $0.02
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
V E N T U R E C A P I T A L R E P O R T
U.S. FUNDRAISING REMAINS STRONG IN 1Q
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FUNDRAISING
U.S. VC Fundraising (2016–2019)
Based on multiple closingsAmerican VC fundraising started 2019 with a bang,
raising $15.46 billion across 141 closings in 1Q. While
the amount raised was down 8% from the previous
quarter, this figure is still very high by historical
standards. In fact, it’s the third-largest amount raised on
a quarterly basis since 2000, with the top two occurring
in 2Q and 4Q last year.
The total number of VC fund closings in 1Q was roughly
the same as the previous quarter, and close to the
quarterly average for the past three years.
Menlo Park-based Technology Crossover Ventures
raised the largest fund of the quarter, collecting $3
billion for its tenth fund. This single fund represented
nearly 20% of the total for 1Q.1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Amount Raised ($B) $14.35$11.91 $8.94 $9.68 $8.20 $14.43 $9.91 $5.70 $8.91 $16.62$13.15$16.83$15.46
Number of Funds 132 119 119 151 175 163 122 146 146 163 151 139 141
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80
120
160
200
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$4.00
$8.00
$12.00
$16.00
$20.00
V E N T U R E C A P I T A L R E P O R T
TOP U.S. VC FUND CLOSINGS IN 1Q 2019
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FUNDRAISING
Firm Name Fund Name
Amount
($M) Closed
in 1Q
Location Offering Status Fund Type Closing Type
Technology Crossover VenturesTechnology Crossover Ventures
X LP$3,000.00 Menlo Park, CA Closed
Late-Stage Venture
CapitalFinal
Accel Partners Accel Growth Fund V $1,500.00 Palo Alto, CA ClosedLate-Stage Venture
CapitalFinal
Riverwood Capital LLC Riverwood Capital Partner III LP $1,002.53 Menlo Park, CA OpenMulti-Stage Venture
CapitalFirst
Flagship PioneeringFlagship Pioneering Special
Opportunities Fund II LP$824.00 Cambridge, MA Closed
Multi-Stage Venture
CapitalFinal
Kleiner Perkins Caufield & ByersKleiner Perkins Caufield & Byers
XVIII LLC$600.00 Menlo Park, CA Closed
Early-Stage Venture
Capital Final
V E N T U R E C A P I T A L R E P O R T
VC INVESTORS ENJOY ANOTHER QUARTER OF RELATIVE STABILITY IN LIQUIDITY MARKETS
With 183 exits, overall activity in the liquidity markets
in 1Q was fairly consistent with the quarterly figures
over the past three years, thanks largely to the
stability of M&A’s. By contrast, the IPO market has
been in a cooling trend for the past three quarters.
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LIQUIDITY
Exit Opportunities for U.S. VC–Backed Companies (2016–2019)
0 50 100 150 200
1Q'16
2Q'16
3Q'16
4Q'16
1Q'17
2Q'17
3Q'17
4Q'17
1Q'18
2Q'18
3Q'18
4Q'18
1Q'19
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
IPOs 6 11 14 10 7 21 7 25 16 30 22 14 10
M&As 155 164 173 163 169 159 173 176 174 181 176 191 173
V E N T U R E C A P I T A L R E P O R T
M&A SHOWS CONTINUED STRENGTH GOING INTO 2019
Unlike the IPO market, M&A’s are a picture of
remarkable stability, with yet another quarter of
strong activity. Although both total deals and dollars
raised were down moderately from 4Q, with $30.66
billion paid across 173 transactions, these figures
are roughly average compared to the quarterly totals
of the past three years.
The largest deal of the quarter was
Johnson & Johnson’s acquisition of Auris Health for
$3.4 billion.
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LIQUIDITY
U.S. VC-Backed M&A Activity (2016–2019)
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Amount Paid ($B) $26.92 $27.10 $36.40 $31.30 $23.01 $19.90 $20.64 $25.83 $29.56 $36.14 $28.08 $36.41 $30.66
Number of M&As 155 164 173 163 169 159 173 176 174 181 176 191 173
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V E N T U R E C A P I T A L R E P O R T
TOP U.S. VC-BACKED M&As IN 1Q 2019
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LIQUIDITY
Company
Name Location Brief Description Industry Code Industry Segment Industry Group
Close
Date
Amount
Paid ($M)Acquirer
Auris Health Inc.Redwood City,
CA
Developer of robotic
technologies used in
bronchoscopic procedures.
Surgical DevicesMedical Devices and
EquipmentHealthcare 2/13/2019 $3,400.00 Johnson & Johnson Inc.
NGINX Inc.San Francisco,
CA
Provider of an open-source
platform to develop and deliver
applications.
Software
Development
Tools
SoftwareInformation
Technology3/11/2019 $670.00 F5 Networks Inc.
Webroot Inc.Broomfield,
CO
Provider of AI solutions to
protect businesses and
individuals against cyber
threats.
Network/Systems
Management
Software
SoftwareInformation
Technology2/7/2019 $618.50 Carbonite Inc.
Demisto Inc.Cupertino,
CA
Provider of a SOP that
combines security orchestration
with incident management.
Network/Systems
Management
Software
SoftwareInformation
Technology2/19/2019 $560.00 Palo Alto Networks Inc.
Hotel Tonight Inc.*San Francisco,
CA
Provider of a mobile application
for last-minute hotel bookings.
Shopping
Facilitators
Consumer
Information Services
Consumer
Services3/7/2019 $465.00 Airbnb Inc.
*Deal pending regulatory approval
V E N T U R E C A P I T A L R E P O R T
LYFT’S DEBUT MASKS WEAKNESS IN IPO MARKET
The U.S. IPO market put on an erratic display in 1Q,
with the number of offerings down sharply from the
highs seen in 2018, while simultaneously recording
a steep increase in the total amount raised. This
was due to the long-awaited IPO for Lyft, which
secured $2.34 billion at a valuation of $21.09 billion.
Without the Lyft IPO, the amount raised would have
been the weakest since 3Q 2017.
Lyft’s offering ranks as the third-largest IPO on
record for U.S. VC-backed companies, after
Facebook in 2012 and Snap in 2017.
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LIQUIDITY
U.S. VC-Backed IPO Activity (2016–2019)
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19
Raised ($B) through IPO $0.38 $0.79 $1.07 $0.94 $3.95 $2.35 $0.58 $3.10 $1.75 $4.69 $2.32 $2.40 $3.34
Number of IPOs 6 11 14 10 7 21 7 25 16 30 22 14 10
0
5
10
15
20
25
30
35
$-
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
V E N T U R E C A P I T A L R E P O R T
TOP U.S. VC-BACKED IPOs IN 1Q 2019
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LIQUIDITY
Company
Name Location
Brief
Description
Industry
CodeIndustry Segment
Industry
Group
Close
Date
Raised through
IPO ($M)Exchange
Lyft Inc.San Francisco,
CA
Operator of an on-demand
ride-sharing service platform.
Transportation
ServicesTravel and Leisure
Consumer
Services3/29/2019 $2,340.00
Nasdaq:
LYFT
Gossamer Bio Inc.San Diego,
CA
Developer of immunology,
anti-inflammatory, and cancer
therapeutics.
Biotechnology
TherapeuticsBiopharmaceuticals Healthcare 2/8/2019 $276.00
Nasdaq:
GOSS
Alector Inc.
South San
Francisco,
CA
Developer of therapeutic
technologies for
neurodegenerative disorders.
Biotechnology
TherapeuticsBiopharmaceuticals Healthcare 2/7/2019 $175.75
Nasdaq:
ALEC
Precision
BioSciences Inc.
Durham,
NC
Provider of genome editing
services.
Biotechnology
TherapeuticsBiopharmaceuticals Healthcare 3/28/2019 $126.40
Nasdaq:
DTIL
Shockwave
Medical Inc.
Santa Clara,
CA
Developer of balloon dilatation
catheters.Surgical Devices
Medical Devices and
EquipmentHealthcare 3/7/2019 $96.90
Nasdaq:
SWAV
V E N T U R E C A P I T A L R E P O R T
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, fundraising, 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 institutional equity investments in early stage, innovative companies and do not include companies receiving
funding solely from corporate, individual, and/or government investors. Figures contained throughout the report are current at the time of publication
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.
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V E N T U R E C A P I T A L R E P O R T
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