venture capital report - dow jones & company · 12/20/2018 · venture capital report...

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 | 2018


VENTURE CAPITAL REPORT

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

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

Highlights for 4Q 2018 include:

•  A long-building tsunami of VC cash crested in 4Q, obliterating all quarterly and annual records for equity investment.

•  VC fundraising surged again with the fourth-largest quarter on record, helping to end 2018 with the biggest annual haul in 18 years.

•  The M&A market had its second-best quarter on record, catapulting 2018 as the top year ever for both the number of M&A transactions and the

amounts paid.

•  VC-backed companies going public had a more mixed quarter, but ended 2018 as the best year for IPOs since 2014.

•  The San Francisco Bay area took 61% of all capital invested into U.S. companies in 4Q, by far the most extreme regional concentration ever seen.

(The Bay Area average dating back to 1992 is 33%.)

2


UNPRECEDENTED QUARTER AND YEAR BREAKS RECORDS FOR U.S. EQUITY INVESTMENT

In a year when every single quarter set a new all-time

record for equity investment, the final quarter managed to

leap 33% above 3Q’s already staggering figure for capital

raised. Altria Group’s $12.8 billion financing for Juul Labs

Inc. played a critical role in this, comprising nearly 30% of

4Q’s total. Indeed, the Juul deal ranks as the largest equity

round in a VC-backed company ever.

Although the number of rounds dipped 14% since 2Q’s

high-water mark (the most active quarter since 2Q 2000), a

relatively small number of mega deals pushed the

investment totals to ever-increasing heights.

2018 ended the year with $130.39 billion in all, a 50%

increase from the previous year, and breaking the record

set in 2000 during the dot-com bubble.

3

FINANCING

Equity Financings in U.S.-Based, VC-Backed Companies (2015–2018)

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Amount Raised ($B) $23.67 $16.48 $19.36 $19.76 $14.21 $19.66 $21.46 $23.82 $22.10 $27.03 $28.13 $32.22 $43.01

Number of Deals 1397 1316 1319 1378 1246 1436 1462 1434 1336 1534 1555 1451 1343

0

200

400

600

800

1000

1200

1400

1600

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00


TOP ROUNDS FOR VC-BACKED COMPANIES (4Q 2018)

4

FINANCING

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

Juul Labs Inc. San Francisco,

CA Consumer Electronics

Electronics & Computer Hardware

Information Technology

Provider of nicotine vaporizers with

temperature control. 12/20/2018

Corporate Equity

$12,800.00 Altria Group Inc.*

Epic Games Inc. Cary, NC Entertainment Consumer

Information Services

Consumer Services

Provider of various video games.

10/26/2018 Growth Equity

$1,250.00 Vulcan Capital, Smash Ventures, Lightspeed Venture

Partners, Kohlberg Kravis Roberts & Co. LP*, Kleiner Perkins Caufield & Byers, Iconiq Capital LLC, aXiomatic

View Inc. Milpitas, CA

Building Materials/

Construction Machinery

Machinery and Industrial Goods

Industrial Goods and Materials

Manufacturer of large-scale architectural

glass. 11/2/2018 VC Later $1,100.00 SoftBank Vision Fund*

Maplebear Inc. (DBA Instacart)

San Francisco, CA

Shopping Facilitators

Consumer Information

Services

Consumer Services

Operator of a local grocery shopping application and delivery service.

10/16/2018 Other Equity

$871.00 Valiant Capital Management LP, Tiger Global Management

LLC, D1 Capital Partners*, Coatue Management LLC

Cambridge Mobile Telematics Inc.

Cambridge, MA Communications

Software Software


Provider of mobile telematics and

analytics for usage- and behavior-based

programs for road and driver safety.

12/19/2018 VC 1st $500.00 SoftBank Vision Fund*


INFORMATION TECHNOLOGY TAKES THE LION’S SHARE OF INVESTMENT IN 4Q

Information Technology companies received the largest share of equity deals

and dollars for both 4Q and 2018 as a whole. This marks the first year since 2014

that IT held the lead among industry groups. The $12.8 billion corporate equity

deal for Juul Labs, in the consumer electronics sector, represented 61% of the

quarter’s total for IT.

Companies in the Consumer Services group were in second place for 4Q in terms

of capital raised, securing $6.42 billion in 205 deals. The top deal in this space

was a $1.25 billion growth equity round for Epic Games, a video game provider.

Business and Financial Services companies placed a strong third, securing $5.9

billion through 294 rounds. Snowflake Computing, a provider of cloud-based data

warehousing services, won the largest financing in this sector with a $450 million

Series F deal.

5

FINANCING 4Q 2018 Industry Breakdown By Number of Deals

4Q 2018 Industry Breakdown By Amount Raised ($B)

294

86

205

19 248

55

428

Business & Financial Services

Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials


14%

3%

15%

1%

13% 5%

49%

Business & Financial Services

Consumer Goods

Consumer Services

Energy & Utilities

Healthcare

Industrial Goods & Materials



MOST ACTIVE INVESTORS FOR U.S.-BASED, VC-BACKED COMPANIES (4Q 2018)

6

FINANCING

28

22

20 20 19

17 16

15

13 12

0

5

10

15

20

25

30

Y Combinator Keiretsu Forum Alumni Ventures Group Sequoia Capital New Enterprise Associates

Andreessen Horowitz Lightspeed Venture Partners

Initialized Capital GV Battery Ventures


NUMBER OF DEALS/AMOUNT RAISED BY METRO REGION (4Q 2018)

7

FINANCING

Metro Region Breakout Number of Deals

Metro Region Breakout Amount Raised ($B)

11

20

26

29

35

36

36

75

112

168

413

Dallas-Fort Worth

Orange County

Austin

San Diego

Potomac

Chicago

Seattle

Los Angeles

Boston

New York

San Francisco Bay Area

Number of Deals by Metro Region

$0.12

$0.20

$0.31

$0.42

$0.57

$0.69

$0.77

$1.77

$2.87

$3.23

$26.13

Dallas-Fort Worth

Austin

Seattle

Orange County

Chicago

Potomac

San Diego

Los Angeles

New York

Boston

San Francisco Bay Area

Amount Raised ($B) by Metro Region


NUMBER OF DEALS/AMOUNT RAISED BY PRIMARY REGION (4Q 2018)

8

FINANCING Number of Deals in 4Q 2018 by Primary Region

Amount Raised ($B) in 4Q 2018 by Primary Region

Number of Deals by Primary Region 4Q 2018 260

29

106

75

127

419

51

50

90

127

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 2018 $4.26

$0.45

$1.05

$0.93

$3.33

$26.18

$0.51

$0.47

$2.68

$3.05

10% 1% 3% 2%

8%

61%

1% 1%

6% 7% Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California

19%

2%

8%

6%

9% 31%

4%

4%

7%

10% Mid-Atlantic

Midwest Central

Midwest East

Mountain

New England

Northern California

Pacific Northwest

South Central

South East

Southern California


MEDIAN DEAL SIZE FOR EQUITY FINANCINGS IN U.S. COMPANIES

9

FINANCING Median Equity Deal Size ($M)

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Median Equity Deal Size ($M) $5.00 $4.29 $4.02 $4.48 $4.47 $4.78 $5.00 $5.00 $5.50 $5.50 $6.50 $6.00 $6.93

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00


Number of Deals

COUNT OF EQUITY FINANCINGS IN U.S. COMPANIES, BY ROUND CLASS

1 0

FINANCING

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Seed 139 123 92 122 119 147 168 160 155 163 191 169 125

First 388 353 369 376 340 342 359 289 275 326 376 293 317

Second 233 224 238 210 194 230 205 228 183 233 227 215 164

Later 435 425 411 457 377 443 401 418 404 475 447 441 412

Restart 3 4 4 3 1 6 2 4 0 2 0 4 0

0

50

100

150

200

250

300

350

400

450

500


Amount Raised ($B)

AMOUNT RAISED IN U.S. COMPANIES, BY ROUND CLASS

1 1

FINANCING

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Seed $0.18 $0.20 $0.16 $0.17 $0.22 $0.28 $0.40 $0.37 $0.41 $0.44 $0.53 $0.54 $0.45

First $3.06 $2.24 $2.40 $3.23 $2.22 $3.46 $3.34 $2.23 $3.56 $4.35 $3.92 $4.86 $4.64

Second $3.26 $2.22 $2.82 $2.45 $2.09 $4.18 $3.07 $3.88 $3.15 $4.84 $3.57 $4.93 $3.25

Later $15.99 $10.22 $9.43 $11.66 $7.58 $10.09 $12.55 $14.48 $12.86 $15.00 $17.14 $17.36 $17.76

Restart $0.05 $0.06 $0.04 $0.54 $0.01 $0.08 $0.06 $0.04 $0.00 $0.03 $0.00 $0.04 $0.00

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00


U.S. VENTURE CAPITAL FUNDS SEIZE LARGEST ANNUAL HAUL SINCE 2000

1 2

FUNDRAISING

U.S. VC Fundraising (2015–2018) Based on multiple closings

U.S. VCs ended 2018 with the 4th largest fundraising frenzy

on record, raising $16.71 billion across 128 fund closings.

Together with the even more impressive second quarter’s

haul (the biggest since 4Q 2000), this ranked as the best

year for US fundraising in 18 years.

The total number of VC fund closings in 2018 was down

slightly from 2017’s record-setting 601 funds, but its 586

figure was more than enough to catapult the year to 2nd

place.

The top fund of the quarter was New York-based Tiger

Global Private Investment Partners XI LP, securing $3.75

billion in its final close. 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Amount Raised ($B) $9.81 $14.35 $11.91 $8.94 $9.73 $8.20 $14.39 $9.88 $5.65 $9.00 $17.62 $11.13 $16.71

Number of Funds 107 132 119 119 149 175 161 121 144 147 163 148 128

0

40

80

120

160

200

$-

$4.00

$8.00

$12.00

$16.00

$20.00


TOP U.S. VC FUND CLOSINGS IN 4Q 2018

1 3

FUNDRAISING

Firm Name Fund Name Amount

($M) Closed in 4Q

Location Offering Status Fund Type Closing Type

Tiger Global Management LLC Tiger Global Private

Investment Partners XI LP $3,750.00 New York, NY Closed Multi-Stage

Venture Capital Final

Bessemer Venture Partners Bessemer Venture

Partners X LP $1,850.00 Menlo Park, CA Closed Multi-Stage


GGV Capital GGV Capital VII LP $1,090.00 Menlo Park, CA Closed Late-Stage


Thrive Capital Thrive Capital Partners VI

LP $1,000.00 New York, NY Closed Multi-Stage


Vivo Capital Vivo Capital Fund IX LP $863.98 Palo Alto, CA Open Multi-Stage

Venture Capital First


U.S. LIQUIDITY CONTINUES STRONG STREAK INTO 4Q, CAPPING MOST ACTIVE YEAR EVER

The number of liquidity events remained historically

high in 4Q, contributing to a year that turned out to be

the strongest on record with 870 exits. The quarter’s

220 M&As and IPOs, though down a hair from 3Q, was

still the third-largest number of exits ever on a

quarterly basis.

As has been the case for many years, the M&A market

was chiefly responsible for this powerful surge in

liquidity. By contrast, the IPO market has been in a

cooling trend for the past two quarters. Even so, 2018

saw the most IPOs of VC-backed companies in four

years.

1 4

LIQUIDITY

Exit Opportunities for U.S. VC–Backed Companies (2015–2018)

0 50 100 150 200 250

4Q'15

1Q'16

2Q'16

3Q'16

4Q'16

1Q'17

2Q'17

3Q'17

4Q'17

1Q'18

2Q'18

3Q'18

4Q'18

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

IPOs 16 6 11 13 8 7 20 8 25 16 31 22 17

M&As 165 149 163 162 150 167 170 182 188 184 190 207 203


SURGE OF ACQUISITIONS IN 4Q ENDS RECORD-BREAKING YEAR FOR U.S. M&A

The M&A market enjoyed its second-best quarter on

record, with $39.84 billion paid for VC-backed

companies, the largest such figure since 4Q 2014. The

strong quarter capped a year which saw a total of

$146.27 billion invested in M&A, the highest annual total

ever.

The largest deal of the quarter was

SAP’s acquisition of Qualtrics International Inc. for $8

billion, announced on November 11. The deal

accounted for around 20% of 4Q’s total.

1 5

LIQUIDITY

U.S. VC-Backed M&A Activity (2015–2018)

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Amount Paid ($B) $28.05 $23.82 $24.65 $26.55 $19.18 $20.04 $20.84 $21.66 $26.82 $33.00 $38.93 $34.45 $39.84

Number of M&As 165 149 163 162 150 167 170 182 188 184 190 207 203

0

50

100

150

200

250

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00


TOP U.S. VC-BACKED M&As IN 4Q

1 6

LIQUIDITY

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

Qualtrics International Inc.* Provo, UT

Provider of enterprise data collection and analysis

products.

Data Management Services

Business Support Services

Business and Financial Services 11/11/2018 Acquisition $8,000.00

SAP SE (NYSE: SAP)

Cylance Inc.* Irvine, CA Provider of cyber security

products and services.

Network / Systems Management

Software Software

Information Technology 11/16/2018 Acquisition $1,400.00

Blackberry Ltd. (NYSE: BB)

PlanGrid Inc. San Francisco,

CA

Provider of a blueprint application for the

construction industry.

Project / Document Collaboration

Business Support Services

Business and Financial Services 11/20/2018 Acquisition $875.00

Autodesk Inc. (NASDAQ: ADSK)

Wrike Inc. San Jose, CA Provider of social project

management and collaboration software.

Business Applications Software Software

Information Technology 11/29/2018 Buyout $800.00

Vista Equity Partners Management LLC

(San Francisco, CA)

PharmaCann LLC* Oak Park, IL Producer and distributor

of medical cannabis. Crop Cultivation /

Horticulture Agriculture and

Forestry Industrial Goods

and Materials 12/24/2018 Acquisition $682.00 MedMen Enterprises

Inc. (CSE: MMEN)

*Deal pending regulatory approval


MIXED PICTURE FOR U.S. IPOs IN 4Q, BUT STRONGEST YEAR OVERALL SINCE 2014

There was a modest dip in the number of VC-backed

IPO’s in 4Q, but those companies which managed to

go public raised 11% more than the previous quarter.

The bigger picture trend can be seen in the long term

figures, which reveal an IPO market that has been

improving in fits and starts for the past two years. On

an annual basis, 2018 was the strongest year both in

the number of offerings and the amount raised since

2014.

Biotech company Moderna Inc. had the quarter’s top

IPO, raising $604.35 million. Traded on Nasdaq as

MRNA, the company was valued at $8.58 billion at

listing.

1 7

LIQUIDITY

U.S. VC-Backed IPO Activity (2015–2018)

4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18

Raised ($B) through IPO $1.36 $0.38 $0.79 $0.99 $0.69 $3.95 $2.04 $0.62 $2.65 $1.75 $4.78 $2.32 $2.58

Number of IPOs 16 6 11 13 8 7 20 8 25 16 31 22 17

0

5

10

15

20

25

30

35

$-

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00


TOP U.S. VC-BACKED IPOs IN 4Q

1 8

LIQUIDITY

Company Name Location

Brief Description

Industry Code Industry Segment

Industry Group

Close Date

Raised through IPO ($M) Exchange

Moderna Inc. Cambridge, MA Developer of messenger RNA (mRNA) therapeutics

and vaccines.

Biotechnology Therapeutics Biopharmaceuticals Healthcare 12/7/2018 $604.35

Nasdaq: MRNA

Allogene Therapeutics Inc.

South San Francisco, CA

Developer of cancer treatments.

Biotechnology Therapeutics Biopharmaceuticals Healthcare 10/11/2018 $324.00

Nasdaq: ALLO

Anaplan Inc. San Francisco, CA Provider of on-demand planning and enterprise

performance applications.

Business Applications

Software Software

Information Technology 10/12/2018 $263.50

NYSE: PLAN

Elastic N.V. Mountain View,

CA Provider of big data search

and analytics software. Database Software Software Information Technology 10/5/2018 $252.00

NYSE: ESTC

Guardant Health Inc.

Redwood City, CA

Provider of genomic cancer testing.

Diagnostic Equipment (Not

Imaging)

Medical Devices and Equipment Healthcare 10/4/2018 $237.50

Nasdaq: GH


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, fundraising, 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 institutional equity investments in early stage, innovative companies and do not include companies receiving funding solely from

corporate, individual, and/or government investors. Figures contained throughout the report are current at the time of publication 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


ABOUT DOW JONES

Dow Jones is a global provider of news and business information, delivering content to consumers and organizations around the world across multiple

formats, including print, digital, mobile and live events. Dow Jones has produced unrivaled quality content for more than 125 years and today has one of

the world’s largest newsgathering operations globally. It produces leading publications and products including the flagship Wall Street Journal,

America’s largest newspaper by paid circulation; Factiva, Barron’s, MarketWatch, Financial News, DJX, Dow Jones Risk & Compliance, Dow Jones

Newswires, and Dow Jones VentureSource.

MEDIA CONTACT:

Colleen Schwartz 212.416.3583

[email protected]

2 0

venture capital report - dow jones & company · 12/20/2018 · venture capital report...

Documents