July 12, 2017
Investors sunk $21.78 billion into a total of 1,958 venture-backed companies during the second quarter of this year, according to Pitchbook data. The dollar amounts are up from the previous quarter, while the number of investments held steady. VCs are making bigger bets, but they’re not making more bets.
The Trend Continues
The second quarter also included the biggest venture fund on record, a $3.3 billion by NEA. The drop in deal volume combined with a rise in capital conforms to last year’s trend. But Pitchbook has another interesting tidbit: On the yearly scale, VC funds have stopped rising overall.
“Through the first six months of the year,” they say, “3,876 companies received $37.76 billion in financing, setting a pace to near or surpass the $71 billion invested last year, and confirming that the industry has leveled off after peaking in 2015.”
Not to worry, however: funds and capital amounts are holding steady in comparison to some dips and turns they’ve taken over the past decade.
“While the pace of the number of funds closing is down from recent years, it is still high relative to the past decade, with a total of 119 funds closing year to date to raise a total of $19.14 billion through the first half of the year. First-time funds continue to find success, with 15 funds closing on $1.5 billion in the first half of the year, a pace that could see the highest level of capital raised for first-time funds in the last decade,” Pitchbook explains.
What It Means
VCs are deploying more capital, but to roughly the same number of companies. What does that mean for the average entrepreneur? If your chances of getting an investment were slim in previous quarters, they’ll remain the same in the near future. But if your chances were good, then the capital you’ll wind up pulling in will likely be even greater.
As long as the stereotype of the egotistical startup founder holds true, most should see this as great news, picturing themselves as the lucky few. But for most people, it simply means they’ll see even more VC-dictated income inequality in the startup world.
Read more about startup investments here at TechCo
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