Pitchbook, the private equity and venture capital data collection firm, is out with a look at the state of venture capital industry in the United States so far in 2017. Here’s a look at what we find to be the 4 most interesting findings.
#1 – A Slow Start to the Year
First off, activity and deal volume. Overall, a slow start to the year. Deal Value came in at about $71 billion in 2016, a decline from the $79 billion in 2015. By way of comparison, the current Deal Volume through the first three months of 2017 is $17 billion – or $68 billion on an annualized basis. Not bad – about what we saw in 2014 – but not real hot either.
On the number of deals closed, the count through the first three months of this year is 1,808 – or 7,232 on an annualized basis – a moderate decline (or what looks like could be a calendar year decline) from the 10,482 in 2015 and the 8,469 we saw in 2016.
Overall, not bad conditions, but certainly not white hot.
Source: Pitchbook
#2 – Median Deal Size Hasn’t Dropped Off
Although the number of deals and deal volume is off to a slow start in 2017, median deal size hasn’t experienced any drop off yet. Overall, median deal size is either slightly higher (or hasn’t dropped off). Hmm.
Source: Job Search Digest
#3 – A Bad Signal is Coming from Angel and Seed Deals
Of the volume and deal count decline, angel and seed deals are down the most. Pitchbook’s most recent count has the deal value through the first quarter of 2017 down to $1.5 billion, a fairly moderate decline from the $1.7 billion in the first quarter of 2016.
The deal count is also down, from about 1,200 in the first quarter of 2016 to about 800 in the first quarter of 2017. The signals should probably give business cycle observers some room for caution.
Source: Pitchbook
#4 – Late Stage Deal Volume is Picking Up
Perhaps surprisingly, although early stage deal volume is slowing down, later stage deal volume is ticking up.
Pitchbook’s accounting of the number of deals closed has the number of late-stage deals coming up in the past few quarter, from about 320 in the third quarter of 2016 to about 380 in the fourth quarter of 2016 and to about 450 in the first quarter of 2017.
Deal Value is also up over the same time period, from $7.4 billion in the fourth quarter of 2016 to about $9.4 billion in the first quarter of 2017.
Source: Pitchbook
Conclusion
Overall, in a fascinating look at the state of venture capital in the United States, Pitchbook’s data shows some interesting contradictions. On the whole, deal value and deal counts are declining, with the strongest declines showing up in early stage investments. On the other hand, later stage venture capital deals are ticking up and median deal value is still going up or staying flat. We will continue to monitor the data to see how things shape up over the course of the year.
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