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Venture capitalists aren’t investing in as many companies as they did last year, but when they place a bet they are doing it at a significantly higher valuation. That’s one of the takeaways from the Pitchbook venture capital report, which found that venture capitalists invested in 1,894 deals in the first quarter, down from 2,495 in the first quarter of 2014.

Meanwhile, Pitchbook found that pre-money valuations increased at a whopping 84 percent during the first quarter, driven in part by massive investments in so-called unicorn companies that are valued at more than $1 billion and include names such as Uber, Pinterest, Airbnb and others.

This shift in capital allocation is changing the venture capital landscape as we know it.

“The startup world seems to be bifurcated into haves and have nots,” says Seattle venture capitalist Bill Bryant, a partner at DFJ. “The haves are seeing valuations explode and are able to secure capital from a plethora of hedge funds, sovereign wealth funds and mutual funds who view late stage investing as a placeholder for eventual IPO participation. There is another segment though of good but not great companies that struggle as the capital moves to a small handful of names.”

This change as the number of exits — IPOs and acquisitions — falls. According to Pitchbook, there were 265 exits during the first quarter, down from 390 during the first quarter of 2014. Even so, the valuations on those deals is increasing, with the median deal size up 23 percent.

The Pacific Northwest saw a significant amount of venture funding in the first quarter, with $687 million invested in 58 deals. That accounted for three percent of the global total for deals and dollars. The San Francisco Bay Area accounted for 23 percent of the total dollars invested in the first quarter with $5.4 billion invested in 327 deals, while New York City accounted for 6.2 percent with $1.4 billion invested in 124 deals.

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