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V E N T U R E C A P I T A L R E P O R T

Venture Capital Report U.S. | 4Q | 2017


VENTURE CAPITAL REPORT

The following report presents Dow Jones VentureSource’s quarterly findings for U.S. venture capital fundraising, investment, valuation,

and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 4Q 2017 include:

•  U.S. venture capital fundraising decreased in amount invested while the number of funds increased;

•  Venture capital investment in U.S. companies declined;

•  Amount raised through Initial public offerings (IPOs) tripled in the fourth quarter of 2017, mergers and acquisitions (M&As) fell in comparison with the

previous quarter.

2


VENTURE FUNDRAISING DECREASES IN THE U.S. DURING 4Q 2017

3

FUNDRAISING

U.S. VC Fundraising (2014– 2017) Based on multiple closings

121 venture capital funds raised $4.75 billion in 4Q 2017, a 51%

decrease in the amount raised though number of funds were

up 3% from the prior quarter.

Flagship Pioneering Fund VI LP was the largest

U.S. venture capital fund of 4Q 2017, raising $618 million and

accounting for 13% of the total venture capital financing

raised during the quarter.

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Amount Raised ($B) $9.37 $9.01 $13.70 $5.76 $9.13 $14.19 $11.72 $8.78 $9.42 $8.12 $14.27 $9.74 $4.75

Number of Funds 114 80 113 77 102 128 116 116 143 166 153 117 121

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$-

$2.00

$4.00

$6.00

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$10.00

$12.00

$14.00

$16.00


LARGEST VC FUNDS RAISED IN 4Q 2017

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FUNDRAISING

Firm Name Fund Name Amount ($M) City State Offering Status Fund Type Fund Category Closing Type

Flagship Pioneering Flagship Pioneering Fund

VI LP $618.00 Cambridge MA Closed Early-stage

venture capital

Venture Capital Final

Andreessen Horowitz AH Bio Fund II LP $450.00 Menlo Park CA Closed Early-stage

venture capital

Venture Capital Final

Frazier Healthcare Partners Frazier Life Sciences IX LP $418.93 Seattle WA Closed Early-stage

venture capital Venture Capital Final

Icon Ventures Icon Ventures VI LP $265.00 Palo Alto CA Closed Early-stage


Vida Ventures LLC Vida Ventures LLC $254.80 Boston MA Closed Multi-stage



U.S. VENTURE INVESTMENT IN 4Q 2017 DECREASES

U.S.-based VC-backed companies received $18.88 billion in

957 equity deals in 4Q 2017, which is at a similar level to the

capital raised in the third quarter of 2017. During the same

period, the number of deals decreased 10%.

Consumer Services received the highest amount of

investment, accounting for 25% of the total capital raised.

The sector experienced a sharp rise of 78% from the last

quarter, up 90% when compared to the same period last

year.

5

FINANCING

Equity Financings into U.S.- Based, VC-backed Companies (2014–2017)

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Amount Raised ($B) $18.70 $16.80 $19.90 $20.83 $20.14 $13.96 $18.17 $14.14 $11.18 $17.37 $17.85 $19.06 $18.88

Number of Deals 1115 1094 1231 1097 1139 1058 1050 1056 965 1122 1121 1059 957

0

200

400

600

800

1000

1200

1400

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00


Number of Deals

EQUITY FINANCINGS IN U.S.–BASED, VC–BACKED COMPANIES, BY ROUND CLASS (QUARTER ON QUARTER, 2014–2017)

6

FINANCING

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Restart 7 6 5 3 2 4 4 4 2 6 1 4 0

Later 311 300 350 315 312 291 301 307 256 310 253 247 203

Second 206 242 266 219 240 232 231 202 197 224 193 206 165

First 410 377 422 395 398 369 372 367 349 335 311 247 211

Seed 99 87 110 96 113 95 67 97 81 120 153 139 133

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200

300

400

500


Amount Raised ($B)

EQUITY FINANCINGS IN U.S.-BASED, VC-BACKED COMPANIES, BY ROUND CLASS (QUARTER ON QUARTER, 2014–2017)

7

FINANCING

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Restart $0.13 $0.04 $0.09 $0.06 $0.02 $0.06 $0.04 $0.55 $0.03 $0.08 $0.01 $0.04 $0.00

Later $11.95 $10.22 $12.01 $12.37 $13.30 $8.22 $8.37 $7.50 $5.04 $8.13 $10.05 $10.82 $9.90

Second $3.06 $3.24 $3.81 $3.66 $3.09 $2.24 $2.74 $2.34 $2.46 $3.88 $2.96 $3.50 $2.88

First $2.85 $2.41 $2.63 $2.96 $2.99 $2.48 $2.50 $3.12 $2.31 $3.92 $2.95 $2.03 $2.48

Seed $0.12 $0.10 $0.14 $0.12 $0.14 $0.15 $0.11 $0.13 $0.12 $0.21 $0.39 $0.33 $0.35

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00


EQUITY FINANCINGS IN U.S.-BASED, VC-BACKED COMPANIES, MEDIAN DEAL SIZE ($M) (2014–2017)

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FINANCING Median Equity Deal Size ($M)

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Median Equity Deal Size ($M) $5.51 $5.00 $5.00 $5.50 $5.37 $5.00 $5.00 $5.00 $5.00 $5.00 $6.00 $5.40 $6.50

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00


EQUITY FINANCINGS IN U.S.-BASED, VC-BACKED COMPANIES, BY INDUSTRY GROUP (4Q 2017)

Consumer Services took first place with a 25% of total investment, accumulating

$4.74 billion through 141 deals. While the number of deals declined compared to

the number of deals in 3Q’17, the amount raised almost doubled (up 78%).

Healthcare kept its second place with $4.71 billion raised through 214 deals.

Compared to the performance of this sector in the previous quarter, the numbers

signify a 3% decrease in deal flow, yet a 16% rise in amount raised. The sector’s

investment figures represent approximately 25% of total equity investment in

U.S. VC-backed companies for the quarter.

Information Technology placed third this quarter in terms of equity financing,

accounting for 24% of all 4Q’17 investment. The 310 deals drew $4.53 billion, an

increase of 33% in capital raised compared to the previous quarter.

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FINANCING 4Q'17 Industry Breakdown By Number of Deals

4Q’17 Industry Breakdown By Amount Raised ($B)

203

50

141

12 214

23

310

Business and Financial Services

Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials

Information Technology

16%

8%

25%

1%

25%

1%

24%


Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials

Information Technology


TOP 4 DEALS INTO VC-BACKED COMPANIES (4Q 2017)

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FINANCING

Co. Name Location Industry Code Industry Segment Industry Group Brief Description Close Date Round Type Raised ($M) Round Investors (* denotes lead)

Lyft Inc. San Francisco, CA Transportation

Services Travel and Leisure

Consumer Services

Provider of an on-demand ridesharing

service platform. 10/19/2017 Later $1,500.00

CapitalG*, Fidelity Management & Research Co., Ontario Teachers' Pension Plan Board, Undisclosed Investor(s)

NextEV Ltd. San Jose, CA Automobiles Vehicles and Parts Consumer Goods Provider of electric and autonomous

vehicles. 11/8/2017 5th $1,000.00

Baillie Gifford & Co. Ltd., China Asset Management Co. Ltd., CITIC Capital Holdings Ltd., Lone Pine Capital, Russia-China

Investment Fund, Tencent Holdings Ltd.*

Urban Compass Inc. New York, NY Real Estate Financial

Institutions and Services


Provider of a real estate purchase and

rental platform. 12/7/2017 6th $550.00

Fidelity Investments*, IVP, SoftBank Vision Fund, Wellington Management Co. LLP

Magic Leap Inc. Dania Beach, FL Displays Electronics and

Computer Hardware Information Technology

Developer of an augmented reality visual computing

system.

10/17/2017 5th $502.00

Alibaba Group Holding Ltd., EDB Investments, Fidelity Management & Research Co., Google Inc., Grupo Globo, Janus

Henderson Investors, JPMorgan Chase & Co., T. Rowe Price Group Inc., Temasek Holdings Pvt. Ltd.*


MOST ACTIVE INVESTORS FOR U.S.-BASED, VC-BACKED COMPANIES (4Q 2017)

1 1

FINANCING

28

21

14 13

12 12 12

0

5

10

15

20

25

30

New Enterprise Associates Inc.

Keiretsu Forum Y Combinator GV Sequoia Capital Intel Capital Accel Partners


NUMBER OF DEALS/AMOUNT RAISED BY PRIMARY REGION (4Q 2017)

1 2

FINANCING Number of Deals in 4Q 2017 by Primary Region

Amount Raised ($B) in 4Q 2017 by Primary Region

Number of Deals by Primary Region 4Q 2017 212

18

61

48

88

326

42

38

45

75

Mid-Atlantic Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California

Amount Raised ($B) by Primary Region 4Q 2017 $3.67

$0.34

$0.64

$0.43

$2.01

$9.46

$0.44

$0.22

$0.87

$0.81

Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California

Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California


NUMBER OF DEALS/AMOUNT RAISED BY SUBREGION (4Q 2017)

1 3

FINANCING

Number of Deals by subregion 4Q 2017

Amount Raised ($B) by subregion 4Q 2017

Austin Metro 17 $0.11

Boston Metro 79 $1.97

Chicago Metro 26 $0.32 Dallas-Fort Worth 5 $0.05

Los Angeles Metro 39 $0.36

New York Metro 147 $2.41

Orange County 10 $0.04

Potomac 29 $0.66

San Diego Metro 22 $0.35

San Francisco Bay Area 327 $9.02

Seattle Metro 31 $0.29

Subregion Breakout Number of Deals

Subregion Breakout Amount Raised ($B)

17

79

26

5

39

147

10

29

22

327

31

Austin Metro

Boston Metro

Chicago Metro

Dallas-Fort Worth

Los Angeles Metro

New York Metro

Orange County

Potomac

San Diego Metro

San Francisco Bay Area

Seattle Metro

Number of Deals by Subregion

$0.11

$1.97

$0.32

$0.05

$0.36

$2.41

$0.04

$0.66

$0.35

$9.02

$0.29

Austin Metro

Boston Metro

Chicago Metro

Dallas-Fort Worth

Los Angeles Metro

New York Metro

Orange County

Potomac

San Diego Metro

San Francisco Bay Area

Seattle Metro

Amount Raised ($B) by subregion


VENTURE M&A AND IPO MARKET ACTIVITY IN THE U.S. DURING 4Q 2017

Mergers and acquisitions (M&As) for venture-backed

companies decreased 28% in value from 3Q 2017, with

135 deals getting $14.05 billion.

The number of IPOs in 4Q 2017 more than tripled during

the same period. The amount raised was $2.03 billion,

a 228% increase from the previous quarter.

1 4

LIQUIDITY

Exit Opportunities for U.S. VC–backed Companies (2014–2017)

0 20 40 60 80 100 120 140 160 180

4Q'14

1Q'15

2Q'15

3Q'15

4Q'15

1Q'16

2Q'16

3Q'16

4Q'16

1Q'17

2Q'17

3Q'17

4Q'17

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

IPOs 23 13 29 12 16 6 11 13 8 7 18 8 24

M&As 140 156 114 149 141 147 160 160 146 166 154 145 135


U.S. VC-BACKED M&As (2014-2017)

135 M&As of venture-backed companies in the U.S.

amounted to $14.05 billion during 4Q 2017.

•  Compared to 3Q 2017, when a total of 145

transactions accumulated $19.62 billion, both the

number of deals and the amount raised decreased

by 7% and 28%, respectively.

•  The largest M&A of the quarter was

musical.ly Inc. which was valued at $500 million in

its last round from 2016. In December this year the

company was acquired for $1 billion by Beijing Byte

Dance Telecommunications Co. Ltd.

1 5

LIQUIDITY

U.S. VC-backed M&A Activity (2014 - 2017)

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Amount Paid ($B) $35.44 $11.88 $10.23 $15.01 $16.15 $22.18 $22.06 $24.85 $18.93 $24.16 $18.59 $19.62 $14.05

Number of M&As 140 156 114 149 141 147 160 160 146 166 154 145 135

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TOP 3 U.S. M&As (4Q 2017)

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LIQUIDITY

Company Name Location Brief Description Industry Code Industry Segment Industry Group Close Date Round Type Amount Paid ($M)

Acquirer

musical.ly Inc. Santa Monica,

CA Provider of a lip-syncing

app for smartphones. Communications

Software Software Information Technology 12/19/2017 Acquisition $1,000.00

Beijing Byte Dance

Telecommunications Co

NeoTract Inc. Pleasanton,

CA

Provider of minimally invasive devices focused

on urological and gynecological disorders.

Therapeutic Devices (Minimally Invasive /

Noninvasive)

Medical Devices and Equipment Healthcare 10/2/2017 Acquisition $725.00 Teleflex

Rimini Street Inc. Las Vegas, NV

Provider of a third-party enterprise software

support and maintenance services in United States

and Canada.

IT Consulting Business Support

Services Business and

Financial Services 10/11/2017 Reverse Merger $638.00 GP Investments

Acquisition Corp.


U.S. VC-BACKED IPOs (2014-2017)

24 venture-backed companies raised $2.03 billion through public

offerings in 4Q 2017.

•  Both the number of deals and capital raised grew dramatically

from the last quarter.

•  The largest IPO of 4Q 2017 raised almost twice as much as the

largest listing from the previous quarter. Denali Therapeutics

Inc. (NASDAQ: DNLI) raised $ 250 million in an Initial Public

Offering which valued it at $ 1.7 billion. The company was

backed by investors such as ARCH Venture Partners and F-

Prime Capital.

1 7

LIQUIDITY

U.S. VC-backed IPO Activity (2014 - 2017)

4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17

Raised ($B) through IPO $3.15 $0.93 $2.57 $1.60 $1.36 $0.38 $0.79 $0.99 $0.69 $3.95 $1.75 $0.62 $2.03

Number of IPOs 23 13 29 12 16 6 11 13 8 7 18 8 24

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$4.50


TOP 3 U.S. IPOs (4Q 2017)

1 8

LIQUIDITY

Company Name Location Brief Description Industry Code Industry Segment Industry Group Close Date Round Type

Raised through IPO ($M)

Exchange

Denali Therapeutics Inc.

South San Francisco, CA

Developer of therapies for neurodegenerative diseases.

Biotechnology Therapeutics Biopharmaceuticals Healthcare 12/8/2017 IPO $250.00 NASDAQ: DNLI

MongoDB Inc. New York, NY Provider of an open-source,

non-relational database. Data Management

Services Business Support

Services Business and

Financial Services 10/19/2017 IPO $192.00 NASDAQ:MDB

Apellis Pharmaceuticals

Inc. Crestwood, KY

Developer of therapeutic compounds for autoimmune and inflammatory diseases.

Biotechnology Therapeutics Biopharmaceuticals Healthcare 11/9/2017 IPO $150.00 NASDAQ: APLS


ABOUT US

Dow Jones VentureSource helps venture capitalists, corporate development executives, investment bankers and service providers find deal and

partnership opportunities, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It

provides accurate, comprehensive data on venture-backed companies – including their investors and executives – in every region, industry and stage of

development throughout the world.

The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in VentureSource.

This data was collected through surveys of professional firms, interviews with company executives, and from secondary sources. These venture capital

statistics cover equity investments into early stage, innovative companies and do not include companies receiving funding solely from corporate,

individual, and/or government investors. Figures contained throughout the report current at time of editorial but are subject to change without notice.

No statement herein is to be construed as a recommendation to buy or sell securities or to provide investment advice.

1 9


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Download - Venture Capital Report - images.dowjones.com · Vida Ventures LLC Vida Ventures LLC $254.80 Boston MA Closed Multi-stage venture capital Venture Capital Final . VENTURE CAPITAL REPORT

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