Wednesday, 20 December 2017

Venture Capital Deals Break More Records in Q3 2017

Quarter builds on $48bn in deals  announced in Q2 to register an all-time high of $49bn

The venture capital-backed deal industry has registered a second consecutive record-breaking quarter, as 2,362 deals were announced worth a combined $49bn. Expecting  these figures to rise by around 5% as more information become available. This follows Q2, which saw 2,512 deals announced worth $48bn, to put total deal activity in the first three quarters of 2017 at $128bn, on course to become an all-time annual high. However, these record values are being recorded by a declining number of transactions, with Q3 representing the sixth consecutive quarterly decline.Q1-Q3 2017 has seen 7,552 venture capital-backed deals announced, compared to 8,792 in the equivalent period of last year.

Key Venture Capital Deals Facts:

·         In Q3 2017, there were 2,362 deals made with an aggregate deal value of $49bn. This is the           second consecutive quarter to register record high aggregate deal  values.

·          North America saw the greatest activity in the quarter, with 939 deals announced for an                  aggregate deal value of $19bn.

·          Israel saw the greatest drop in deal activity from the previous quarter. In Q2 2017, Israel made      up 34% of aggregate deal value; in Q3, this figure stands at just 1%.

·          Series A financings made up 31% of venture capital deals in Q3 2017, while angel investments     accounted for a further 26% of deal flow.

·         Later stage venture capital deals have increased in value over the past few years. While average     series A-C financings in 2017 YTD are smaller than in 2016, Series D and later funding rounds   have hit a new record high of $98mn.

·         Deals in software account for the greatest proportion of deals (26%), but deals in internet               companies account for the largest share of aggregate deal value (26%).

·         The largest venture capital deal announced in Q3 was the $2bn financing of Grab Holdings.           Funding came from investors including Didi Chuxing, the firm involved in the largest venture capital-backed deal ever recorded.

·          The largest venture capital-backed exit announced in Q3 2017 was the CNY 9.5bn sale of              China-based Mango TV to Happigo.

2017 now seems assured to set new records for venture capital-backed deal activity, as the industry has witnessed its second consecutive record-breaking quarter. Driven by the rising number of late-stage multi-billion dollar financings – eight in Q3 alone – the industry is setting new records with increasing regularity. Increased opportunities in emerging markets and increased appetite from investors are combining to propel the venture capital industry to new heights.

The bulk of deal activity remains focused on the earlier part of the funding cycle, with angel and series A investments accounting for almost half of total deal numbers. However, deal values are increasingly being driven by large late stage financings and debt issuances. In fact, while the average value of financings up to series C have all fallen in 2017, average series D deals are at a record high, while the average venture debt issuance is more than twice as large as it was in 2015.
Source - preqin

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