U.S. venture capital investment activity is returning to steadier times.
That’s one takeaway from the latest Venture Monitor from PitchBook and NVCA, which just released its Q2 report for U.S.-based VC funding.
The report found $21.8 billion invested in 1,958 companies during Q2, which is up from the $16.5 billion invested in 1,797 startups during Q1 but down slightly from the year-ago quarter.
“U.S. venture investment activity is firmly in the middle of a self-correction period,” the report noted. “Signs of this normalization began in the second half of 2016 after investment levels peaked between 2014 and early 2016. While on the surface this leveling off, particularly at the early stage, may give pause to some, those immersed in the industry on a day-to-day basis welcome this news as a healthy return to steadier investment after several years of froth. With valuations coming down, the industry is witnessing a back-to-the-future moment to some degree as trend lines point toward a healthy venture ecosystem.”
The report also found the trend of decreasing deal volume and increasing deal size continuing during Q2, and especially for angel/seed funding, which saw deal volume go down for the eighth consecutive quarter. Pitchbook said many venture investors are seeing more promising companies in the Series B, C, and D stages, “likely an effect of the influx of companies at the early stage that received funding in 2015 and 2016.”
VC exit activity is also normalizing, with $10.5 billion of exit value through 156 transactions reported in Q2, down from $17.2 billion off 211 exits one year ago.
The report also found that late-stage deals may be becoming “the new exit,” as the number of late-stage transactions increased for the third-straight quarter.
Other notes from the report, which you can read here:
- Outcome Health and Lyft had the largest venture financing rounds during Q2 at $600 million, followed by Wish ($500 million), Intarcia Therapeutics ($475 million), Unity ($400 million), and Houzz ($400 million).
- 58 funds raised a combined $11.4 billion during Q2, up from $7.9 billion last quarter. ” “Coming off a torrid 2016, fundraising totals may not increase this year but have remained more than healthy nonetheless,” the report noted.
- GV was the most active corporate venture capital firm through the first half of 2017, with 26 deals, followed by GE Ventures (13 deals) and Microsoft Ventures (11 deals).
- California investors were far and away the most active for VC activity during Q2, with 679 deals, followed by New York (226), Massachusetts (132), Washington (91), and Texas (90).
- On the metropolitan level, San Francisco-Oakland-Fremont led the way with 324 deals, followed by New York-Northern New Jersey-Long Island with 236, and Los Angeles-Long Beach-Santa Ana with 143. There were 80 deals in the Seattle-Tacoma-Bellevue region, which ranked sixth, with $489 million invested.