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Quarter-End Insights

Venture Capital: Less Is More?

Coming off a record fundraising year, total VC invested remains strong despite completed transaction counts trending lower.

  • While completed financings have trended lower toward historical norms, the largest contributor to this remains an outsized decrease in financings at the angel/seed level, rather than a blanket decline across all venture stages.
  • With more than $5.1 billion raised via VC-backed IPOs midway through the year, 2017 has already seen roughly 75% more capital raised via public offerings than all of 2016 saw. Four venture-backed companies valued at $1 billion+ (“Unicorns”) have entered the public markets. Two more (Blue Apron and Forescout) have also filed. Should the latter two companies go public, 2017 will set a record for the most Unicorns to IPO in a single year.
  • Private equity (“PE”) has shown heightened interest in the IT sector, with nearly one-fifth of all PE deals completed to date coming in the space. With a large group of venture-backed companies playing in the IT sector, we believe PE firms will account for a heightened proportion of VC-backed exits moving forward. PE can serve as an attractive option to founders looking to remain private in today’s market, while also providing coveted liquidity to VCs, which is an issue that has become increasingly publicized as companies continue to hold off on exit processes.