VC funding tops $70B for second time, 2017 MoneyTree Report

In this first part of a two-part series, SSTI will look at the common themes and trends of 2017 that were highlighted in the 2017 MoneyTree Report. In part two, SSTI will provide insights on some potential new trends observed last year that may continue to affect the investment of venture capital in 2018.

The U.S. venture capital industry’s annual funding topped $70 billion in 2017 for the second time ever, according to PricewaterhouseCoopers (PWC) and CB Insights' 2017 MoneyTree Report. The $71.9 billion invested marked a 6.8 percent increase from 2016 — the record high-water mark of $76.8 billion was achieved in 2015.  

This rebound in annual funding was driven in large part due to a record number of 109 mega rounds (investment rounds of $100 million or more) and increased deal share for expansion-stage (21 percent of all VC deals; up from 19 percent in 2016) and later-stage investment rounds (10 percent of all VC deals; up from 8 percent in 2016).  These mega rounds also led to a rebound in the number of companies achieving unicorn status ($1 billion valuations). In 2017, 22 companies reached unicorn status, up 57 percent from 2016.

While total funding increased to near-record highs, the number of VC deals fell 4 percent, declining to 5,052 in 2017 — the lowest annual total since 2012. This continues a multi-year trend of larger rounds targeting later-stage VC-backed companies and was highlighted by seed stage deal share dipping to 27 percent in 2017 — including just 22 percent in Q4 2017 — down from 32 percent in 2016, according to PWC and CB Insights.

Moving beyond the domestic markets, the global VC market remained strong with global funding reaching a post-2000 record high and an increase of nearly 50 percent from 2016. In 2017, $164 billion was invested across 11,042 deals globally. In addition to increased funding, global deal activity also increased by 11 percent. The global markets were driven by strong growth in the Asian markets and continued strong performance in the European markets.