Technology Banking Industry News

Our Technology Banking team, the senior team members of which have a combined over 40 years of industry experience, are active members of the technology entrepreneur and investor communities across the country. As such we are able to keep our fingers on the pulse of the industry, closely monitoring valuation trends, emerging technologies, and investor appetites.
 

Venture Capital Investment in 2Q17


 

2Q17 saw $21.8B invested over 1,958 deals

  • 14th consecutive quarter with $10B or more invested, yet down 5.2% from 2Q16 but up 36% from 1Q17
     

Although the number of deals closed in 2Q17 declined 9.2% YOY, the amount of capital per deal continues to increase

  • 2Q17 witnessed 34 deals of at least $100MM in value, while 1Q17 had only 12 such transactions
    • Driven by record amounts of dry powder as a result of a strong fundraising environment in which > $129B of funds have been raised since 2014
    • With increased fundraising, startups are taking longer to work through each stage as investors are stressing capital efficiency and reducing burn to manageable levels
US VC Investment by quarter as of June 30, 2017

Venture Capital Investment in 2Q17

Software industry continues to receive the highest level of funding

  • ~$15.6B was invested into 1,446 companies representing ~42% of total invested capital in 1H17
  • Pharma and Biotech attracted the next most amount of investment with $4.6B
US VC Activity by sector as of June 30, 2017

VC Market Update

$11.4B was raised across 58 funds in 2Q17, which was down 16% YOY but up ~46% from 1Q17

  • LP’s remain committed to the asset class as evidenced by the fact that 87% of VC funds that closed in 1H17 hit their fundraising targets, a pace at which the VC industry will achieve its 9th straight yearly increase 
  • First time funds raised $1.5B in 1H17 which puts 2017 on par with the capital raised in 2015, 2013, and 2012
  • Few new fund managers are generalists, rather most are focused on specific markets where they have niche expertise in “next big thing” markets (i.e. artificial intelligence, cloud migration, fintech)

2Q17 Venture-Backed Exits

 

Venture-Backed Exits slide after gaining in 1Q17

  • $10.5B of value was extracted from exits in 2Q17 through 156 deals, which is down 38.8% YoY and down 28% from 1Q17
    • The average time to exit has increased to 6 years through 1H17 compared to < 5 years a decade ago; this parallels the average time between new funds increasing also to ~6 years
  • M&A remains the dominant exit path since 2010, accounting for ~74% of exit activity in 2Q17
    • Performance of IPO offerings continues to be mixed, a notable example is Cloudera’s IPO which valued the company lower than its last private funding round, a situation that most other companies considering an IPO exit have monitored closely
US VC Backed Exit Activity as of June 30, 2017
US VC Backed Exit Activity as of June 30, 2017

For more information contact:

John Hoesley
Managing Director
312-564-2711

Josh Roberts
Managing Director
312-564-1813