附近上门

There鈥檚 a ton of data to pack into this 2018 fourth quarter and full year startup funding report. That creates incentive to cut down on introductory meandering about broad trends.

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So, let鈥檚 cut to the chase: The bull run continues. Projected funding (see Methodology notes) for U.S. and Canadian startups was up across all stages on a quarter-over-quarter and year-over-year basis, driven by a surge in supergiant rounds.

For Q4 of 2018, venture and growth investors put an eye-popping $41.4 billion to work in U.S. and Canadian startups, according to 附近上门 projections.1 That鈥檚 a rise of 18 percent from the prior quarter and a jump of more than 50 percent from year-ago levels.

The full-year numbers also show a massive spike in investment. 附近上门 projects that investors put a staggering $136 billion into startups in all of 2018. That鈥檚 an increase of 41.5 percent from 2017 levels and the highest annual total in the history of the 附近上门 dataset.

Still, not everything in startup-land was looking quite so rosy. While venture capitalists outdid themselves pouring money into deals, their record for generating exits was less impressive. Tech IPOs were largely stagnant in Q4, and VCs notched just one multi-billion-dollar M&A exit during the quarter with SAP鈥檚 $8 billion purchase of Qualtrics.

Below, we break down the key data points and trends for the fourth quarter and full year, replete, as usual, with plenty of charts.

Q4 Mantra: Spend, Spend, Spend

Let鈥檚 start with the Q4 numbers. As mentioned previously, it was a spendy three months, and startups from seed through growth stage shared in the largess.

Looking at investment levels over the past five quarters in the chart below, the uptrend is quite clear. Total spending just keeps going up:

Now, let鈥檚 break down the quarterly numbers by stage.

Late Stage

Late-stage Q4 totals were particularly high. Of the projected $41.4 billion invested in the fourth quarter, about 52 percent, or $21.7 billion, went to late-stage deals (Series C and beyond, plus other round types). That鈥檚 a rise of 18 percent in dollar terms from the prior quarter and up a remarkable 53 percent from year-ago levels.

There were some unusually large late-stage rounds in the mix for Q4, including on record valued at $100 million or more. Recipients of some of the biggest rounds included grocery delivery service , spacetech pioneer , data warehousing provider , and custom microbe developer .

Round counts ticked up as well. A projected total of 318 startups announced late-stage financings in Q4, up 7 percent from the preceding quarter and 39 percent from year-ago levels.

In the chart below, we detail late-stage investment and round counts over the past five quarters:

Technology Growth

Meanwhile, technology growth2 investment, the most volatile stage in the 附近上门 dataset due to the small number of deals, showed the largest percentage rise. Projected total investment in Q4 of 2018 was $4.3 billion, more than double Q3 levels.

That said, most of the Q4 total came from a single deal: a $3 billion SoftBank investment in . We have more details for tech growth deal making for the past five quarters in the chart below:

Early Stage

Venture investment at the early stage (Series A and B, plus a subset of other round types) did not show the same sharp rise as late and tech growth stage in Q4. Nonetheless, investment levels were up from both prior quarter and year-ago levels.

In all, investors put a projected $14 billion to work in U.S. and Canadian early-stage startups in Q4. That鈥檚 a rise of 11 percent from the third quarter and 26 percent from the same period a year ago.

A plethora of extra-large rounds boosted the totals. At least closed Series A and B rounds of $100 million or more, including $385 million for car leasing startup and $300 million for healthcare plan provider .

While investors backed bigger early stage deals, they didn鈥檛 close a lot more rounds, at least not quarter-over-quarter. Projected fourth quarter round counts totaled just over 1,400, up incrementally from Q3, and a rise of over 20 percent from year-ago levels.

In the chart below, we lay out early-stage numbers and round counts over the past five quarters:

Seed

Investment in seed stage startups hit its highest total in five quarters in Q4. 附近上门 projects that investors put $1.76 billion into just over 1,800 startups in the just-ended quarter.

The boost in seed-stage investment resulted from bigger deals, not more of them. 聽In dollar terms, investments were up 27 percent from the prior quarter and 30 percent from year-ago levels. However, projected round counts dipped some, falling about 13 percent from Q3 levels.

In the chart below, we lay out the projected seed-stage investment totals and round counts for the past five quarters:

2018 Was Very Spendy Too

Now let鈥檚 turn to the full-year numbers for 2018. As noted earlier, it was a year of extraordinarily high startup investment levels, the highest since 附近上门 began tracking this stuff.

In all, 附近上门 projects that investors put just over $136 billion into U.S. and Canadian startups during the calendar year, with the largest chunk going to late-stage deals. Supergiant financings lifted the totals, with at least of $100 million or more announced in 2018.

In the chart below, we compare 2018 funding totals by stage to the prior four years. It shows 聽funding levels hitting multi-year highs across stages:

The late-stage funding totals for 2018 warrant particular attention. Over the course of the year, investors put an unprecedented $71 billion into venture deals at Series C and later, led by enormous rounds for construction tech unicorn , , and Instacart.

Round Counts

As total investment soared in 2018, deal counts rose as well, but by a smaller degree. 附近上门 projects around 14,800 rounds closed in the course of the year across all stages, up about 20 percent from 2017. We compare total counts by stage for the past five years in greater detail in the chart below:

Most Active Investors

While startups are raising more money, they鈥檙e largely raising it from the same firms that backed them when typical round sizes were much smaller.

A 附近上门 compilation of the most active investors in early and late-stage startups shows familiar names topping the lists.

In the chart below, we look at the most active early-stage investors, based on reported data, topped by , and followed by (NEA) and :

Next, we look at the most active late-stage investors (again, based on reported data), a list also led by well-known firms including NEA, and .

(Not) Heading For The Exits

Thus far, our number-crunching for Q4 and 2018 has featured a lot of upbeat trend lines about growing investments. As we turn to exits, however, the picture gets murkier.

While there were some big exits in the just-ended quarter and the past year, the money investors took out of their existing investments doesn鈥檛 appear to come close to rivaling the sums put into new ones.

Q4, in particular, was a slow period for technology IPOs, with just : , , and . Biotech offerings fared better, with about a from VC-funded companies.

There were several good-sized acquisitions of venture-backed companies as well in Q4, albeit only one blockbuster deal: SAP鈥檚 $8 billion purchase of , a profitable enterprise software provider that had been on the verge of going public. The second-largest M&A deal of the quarter was Blackberry鈥檚 $1.5 billion purchase of cybersecurity startup , followed by Autodesk鈥檚 purchase of construction software developer .

As for 2018 as a whole, investors churned out a number of big exits, including IPOs of unicorns like , , and 聽. Biotech IPOs rolled out a brisk pace. 聽And M&A chugged along, with an estimated involving venture-backed companies. Of those, Qualtrics and (acquired by Microsoft for $7.5 billion) commanded the largest sums.

Conclusion

So, investment levels for 2018 were off the charts. Given that, one could make a case that the startup fundraising environment this past year showed a lot of traits associated with cyclical peaks. Also, given the less buoyant public market environment over the past few months, one could also make a case that a private market pullback is likely to follow.

That said, there鈥檚 still a lot of dry powder in venture firm coffers, thanks to a blockbuster fundraising year. There鈥檚 also plenty of excitement in startup circles around expectations for a herd of unicorns stampeding to exit in coming months. Uber and Lyft have already filed for IPOs, while Pinterest and Slack are reportedly planning to do so shortly.

What does that mean for the year ahead? After closing out 2018 as the year of the supergiant funding round, investors are now hoping 2019 will be the year of the supergiant exit. Of course, we鈥檒l have to wait and see.

Methodology

About Projected Data

There is often a delay between when a venture capital deal is closed, and when it鈥檚 publicly reported and captured by 附近上门. Accordingly, 附近上门 compensates for this pattern of delays by scaling reported (e.g. currently known and recorded in 附近上门) data up in proportion to historical patterns of undercounting and late reporting.

Glossary of Funding Terms

For reporting purposes, 附近上门 aggregates its funding data into “stages,” reflecting the different phases of private company development. Rounds are classified by stage according to the following sets of rules.

• Angel & Seed-stage is comprised of seed, pre-seed, and angel rounds. 附近上门 also includes venture rounds of unknown series, transactions of undisclosed type, and convertible notes totaling $1 million (USD or as-converted USD equivalent) or less. Equity crowdfunding rounds with no listed dollar value, as well as those totaling less than $5 million, are also counted as seed-stage.
• Early stage is comprised of Series A and Series B rounds, as well as other round types. 附近上门 includes venture rounds of unknown series, transactions of undisclosed type, and convertible notes totaling between $1,000,001 and $15,000,000. Convertible note rounds with missing dollar values are also counted as early-stage.
• Late stage is comprised of Series C, Series D, Series E, and later-lettered venture rounds following the “Series [Letter]” naming convention. Also included are venture rounds of unknown series, transactions of undisclosed type, and convertible notes of $15,000,001 or more.
• Technology growth is a private equity round raised by a company that has previously raised a “venture” round. (So, basically, any round from the previously-defined stages.)

Note: Fundings denoted by 附近上门 as corporate rounds are not included in 附近上门 stage classification metrics and therefore do not get included in annual and quarterly startup investment totals. In some instances, this will impact totals to a significant degree. (In Q4 of 2018, for instance, 附近上门 did not include the $13 billion Altria investment in e-cigarette maker Juul as a venture round.)

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