Venture capital (VC) investment in the United States soared to $84.24 billion in 2017, making the year the strongest for VC investment since the dot-com bubble, according to Venture Pulse, a quarterly report published by KPMG.
Total deal value in the U.S. during Q4’17 rose to $23.75 billion, up from $21.24 billion in Q3’17. The number of deals was down from 1997 in Q3’17 to 1778 deals in Q4’17.
Deal volume declined as investors focused on placing bigger bets on a smaller number of companies that they believed had a stronger path to profitability, according to the report. In addition to the three megadeals, the U.S. also saw numerous $100 million plus rounds, with the top 10 deals accounting for more than one quarter of the total investment during the quarter.
“In 2018, we expect VC activity in the U.S. to build off the optimism and momentum that has returned to the U.S. and global markets,” said Brian Hughes, national co-lead partner, KPMG LLP’s Venture Capital Practice in the U.S. “This should also be helped by stronger exit markets in both IPO’s and M&A activity for VC backed companies.”
Investors remain focused on late stage deals
With VC investors in the U.S. focused on late stage deals throughout 2017, the number of deals at other funding levels have decreased significantly. The decline in angel & seed deals has been most prominent, dropping to 47 percent of all deals during 2017 compared to well over 50 percent in previous years.
Healthtech and Biotech see strong growth in the U.S.
Venture Capital and corporate investor interest in healthtech and biotech grew significantly in 2017, as several large deals were completed in Q4’17. Healthcare companies also topped the charts in terms of exits, which has helped spur more activity overall.
“While there is no indication that we will return to the level of IPO activity we saw in 2015, there is a likelihood that 2018 will see an increased number of IPOs. However, the secondary market is poised to see even greater growth as many companies choose to remain private for longer.” said Conor Moore, national co-lead partner, KPMG Venture Capital practice in the U.S.
Other U.S. highlights from Q4 report
- The Q4 median pre-money valuation for all Series D or later VC deals in the U.S. hit $250 million in 2017, a massive increase from the $135 million in 2016.
- In Q4’17, three U.S.-based companies raised $1 billion plus funding rounds including:
- Ride-hailing company Lyft ($1.5 billion)
- Cancer-screening biotech Grail Technology ($1.2 billion)
- Automotive company Faraday Future ($1 billion)
The complete report can be read here.