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Venture Capital Investors Doing Less Deals, But Spending More, Data Shows

Venture Capital Investors Doing Less Deals, But Spending More, Data Shows

"Value over number" seems to be the mantra guiding venture capital funds these days, or that's what is revealed by Statista.

Despite an ongoing drop in the number of deals, spending by venture capital funds remains on track to be the highest since the turn of the millennium, according to data from Pitchbook NVCA Venture Monitor.

The number of venture capital deals clinched in the first nine months of 2017 totaled 5,948, down 11 percent year-over-year. This marked the lowest since 2011, when about 5,104 venture capital deals were struck.

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"This divergence comes as the industry continues to transition, putting more capital into fewer deals and working toward growth that couples traditional KPIs with the hockey stick user growth that VC demands," Pitchbook NVCA Venture Monitor said.

The deal size in terms of dollars, however, was at $61.39 billion, thanks to record fundraising levels and a high amount of cash reserves. The round sizes are increasing, with the rounds being raised later in the life cycle of companies, thereby prolonging the time to exit for many businesses.

Infographic: Venture Capital: More Money, Fewer Deals | Statista

The average deal size rose to a decade-high of $10.3 million in 2017, as late-stage funding continued to increase. The median deal size of late-stage funding was $11 million in the first three quarters of 2017, a sizeable number compared to the $1 million figure for angel/seed investments and $6 million for early stage venture capital deals.

The dollar value of venture capital deals looks massive only until we look at numbers from the dotcom era. At the height of the tech-bubble era in 2000, venture capital spending amounted to a staggering $180 billion, which is roughly three times of the spending thus far in 2017.

It sure looks a long way to go before we catch up on those numbers.

Image credit: HBO's Silicon Valley, YouTube


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