U.S. startup investment activity somewhat rebounded after a downturn late last year, with larger rounds and an improving environment for tech IPOs. However, funding totals are still below the highs set several quarters ago.
A preliminary analysis of Crunchbase data shows that funding for U.S. startups ticked up in the first quarter of this year, with investment holding up at historically high levels across all stages.
Overall, according to Crunchbase projections, U.S. companies raised $21 billion in seed, venture, and technology growth-stage financing in Q1 2017, up from $18 billion in Q4 2016. Funding looks to be up sequentially for early stage and later investments, and the total number of funding rounds increased at all stages.
The following graph shows total projected investment, color-coded by stage.
In the chart below, we look at round counts, another crucial indicator of the health of the startup ecosystem. For Q1 of this year, round counts appear to be recovering some from Q4 2016 levels. Average round size, meanwhile, looks to be trending up across stages.
The latest projected quarterly numbers indicate that the much-talked-about slowdown in funding hasn’t played out as many were predicting. U.S. venture investment showed a marked decline in the fourth quarter, but it appears the downward trajectory has at least temporarily reversed course.
To summarize: Supersized rounds at marked-up valuations are still closing, seed and early stage funds are still investing actively, and very big exits are getting done. And looking to the late stage, multiple consumer-facing online platforms closed rounds of more than $200 million each.
Before drilling down into startup funding, it’s worth recalling that investors get into the space with the idea of making money, and seeing that happen is among the most the most bullish indicators.
Snap certainly helped stoke optimism when it raised $3.4 billion in a March offering, making it the largest tech IPO in years. Following Snap was AppDynamics, which was supposed to be the first big enterprise software debut. Instead, the company ended up canceling its IPO in favor of being scooped up by Cisco for $3.7 billion. A few weeks later, MuleSoft carried out the first IPO for an enterprise software unicorn, and its shares closed up 46 percent in first-day trading.
Looking solely at the number of IPOs, one could get the impression that Q1 2017 wasn’t a busy period for new offerings. But looking at the size of deals and total capital raised, the numbers look much more impressive—mostly due to Snap.
Overall, Q1 2017 wasn’t a blowout quarter for venture-backed M&A. But Cisco’s purchase of AppDynamics had a large impact on boosting totals.
Notably, the top two deals, AppDynamics and CoverMyMeds, account for an outsized portion of total disclosed M&A spending for the quarter.
Early-stage investment (Series A and B) is projected to total around $7.9 billion for Q1 2017 in the United States. That’s a big jump from Q4 2016 and about on par with other quarters last year.
As usual, a handful of outsized rounds across sectors played a major role in boosting the quarterly totals. By far the largest early-stage round for the quarter went to GRAIL, a blood screening technologies company aimed at detecting cancer at earlier and more easily curable stages. The San Francisco company announced in March that it had closed on over $900 million in Series B funding.
The second-largest Series B round, for $165 million, went to Tricentis, a provider of software testing automation tools; however, while its Series B technically counts as an early stage round, Tricentis isn’t the typical early stage startup. It was founded in 2007 but raised just one prior venture round.
Other large rounds went to SmartSky Networks, a developer of technology for in-flight wireless communications, and CloudMinds, a robotics startup.
Late-stage financing held strong in Q1. Overall, companies are projected to raise about $12.3 billion in Series C and later rounds, including a few technology growth-stage investments. That’s about on par with quarterly totals for 2016, which fell in the $11 billion to $14 billion range.
A handful of companies raised especially large rounds, with consumer-facing businesses leading the pack. App-enabled grocery delivery service Instacart closed on $400 million in Series D funding while Letgo, a mobile marketplace for secondhand products, raised $175 million in Series C financing.
In the chart below, we look at some of the largest C and D rounds.
In addition to big C and D rounds, many more mature venture-backed companies raised substantial investments from VCs and other investor groups. The largest technology growth-stage round for the quarter went to Airbnb, which closed on nearly $450 million.
The world of U.S. startup funding is upbeat, albeit not so effervescent as 2015 and early 2016. The exit environment will be a factor in determining whether the investment climate continues to be strong. If unicorns continue to carry out successful public market debuts, that will go a long way in convincing investors to keep backing large rounds for high-growth startups.
The data contained in this report comes directly from Crunchbase in two varieties: projected data and reported data.
Crunchbase uses projections for global and U.S. trend analysis. Projections are based on historical patterns in late reporting, which are most pronounced at the earliest stages of venture activity. Using projected data helps prevent undercounting or reporting skewed trends that only correct over time. All projected values are noted accordingly.
Certain metrics, like mean and median reported round sizes, were generated using only reported data. Unlike with projected data, Crunchbase calculates these kinds of metrics based only on the data it currently has. Just like with projected data, reported data will be properly indicated.
Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to US dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs, and other financial events as reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.
Glossary Of Funding Terminology
Seed/Angel includes financings that are classified as a seed or angel, including accelerator fundings and equity crowdfunding below $5 million.
Early stage venture includes financings that are classified as a Series A or B, venture rounds without a designated series that are below $15M, and equity crowdfunding above $5 million.
Late stage venture includes financings that are classified as a Series C+ and venture rounds greater than $15M.
Technology Growth includes private equity investments with participation from venture investors.
Our CEO Zamir Shukhov's interview with the SME Innovator magazine about the GVA methodology, acceleration 3.0 and the future of entrepreneurship in Russia.
GVA is recognized as the TOP CHALLENGER according to the UBI Global World rankings of University-linked Business Incubators and Accelerators.
The article on Vedomosti on cooperation between corporations and start-ups. Among examples, there are three GVA's accelerators: Mega Accelerator, PepsiCo LAB and Faberlic FMCG Accelerator.
“Stock investors can’t invest in Uber, but they can invest in Nasdaq-listed Yandex, owner of Russia’s top ride-hailing platform,” writes WSJ reporter Stephen Wilmot, referring to the Yandex.Taxi platform.
The first face-to-face event in the framework of the StartUp Kazakhstan – program orientation took place in innovation cluster of Tech Garden in Almaty on February 1-2. On the first day General Director of the Autonomous cluster Fund "PIT" (Tech Garden) Sanzhar Kettebekov and CEO of Global Venture Alliance Zamir Shukhov addressed to the participants with the introductory speech.
How do the local startup scenes look like in Estonia, Poland, Russia, Ukraine — but also in less known countries, from Bosnia-Herzegovina, to Moldova, to Georgia? How much do VCs invest these countries? Are corporations involved in these emerging ecosystems? Which are the most well-funded startups, and which younger ones should be followed? Why do so many ICOs come from Eastern Europe?
The beginning of this year saw major moves on the Russian eSports scene, a sizable European market with established players operating globally. Thus, last week Mail.Ru Group — an LSE-listed Internet company which controls the largest Russian-language social networks and a range of online gaming companies — announced the full acquisition of ESforce.
GVA’s partner Pavel Luksha, founder Global Education Futures and professor at Moscow School of Management, has a new report out on what graduates should know and be able to do. “Skills of the Future: How to Thrive in the Complex New World” was developed with WorldSkills Russia during sessions of the Atlas of Emerging Jobs project. The report is a thoughtful review of global trends, changes in work and concludes with implications for education. Not a continuation of the present, the authors “believe that mankind should take a serious approach towards the formation of a desired image of the future.”
On January 22 during the official visit of the President of the Republic of Kazakhstan Nursultan Nazarbaev to the USA the autonomous cluster fund Tech Garden signed a number of important agreements with American companies on the digitization of the economy of Kazakhstan.
At the international GELP Moscow 2017 Summit, which was held in Moscow on 1st to 3rd of November, leaders of Russian and foreign education from 12 states outlined practical steps for systematical change of the global educational environment, taking into account the existing global challenges of civilization.
Global Venture Alliance took part in a closed round table session organized by Forbes Russia.
The authoritative international alliance Global Education Leaders` Partnership (GELP), which influences the development of school education abroad, for the first time, chose Russia as a meeting point for leaders and experts of the world educational community. The official operator of GELP is the Global Venture Alliance.
Global Venture Alliance is the general sponsor of the event on the occasion of the 100th anniversary of the magazine Forbes.
The Global Venture Alliance team on October 17 at the international forum "Open Innovations 2017" in Skolkovo organized a closed signing between RZhD, IBM, NES and NCC in the field of transport logistics.
IKEA Centers Russia and GVA have identified 9 start-ups that will go into the MEGA Accelerator business incubator. Theese are Altair VR virtual planetarium, mobile application Save4time, virtual bot MRBot, VR-platform Hexa, interactive game Ligrook, time scheduler Verme, HR-robot Robot Vera, corporate messenger Beesender and IT-service for lawyers Bots & Partners. This was reported to Firrma in IKEA Centres Russia.
Tim Cook has not-so-subtly hinted that Apple is working on some sort of augmented reality product. And while ARKit may be the start, a patent application published today hints at what Apple could be picturing down the road.
Apple has teamed up with Australian-based Cochlear to bring iPhone users the first made for iPhone Cochlear implant.
Approved by the U.S. Food and Drug Administration in June, Cochlear’s Nucleus 7 Sound Processor can now stream sound directly from a compatible iPhone, iPad or iPod touch to the sound processor.
Google’s London-based AI outfit DeepMind has created two different types of AI that can use their ‘imagination’ to plan ahead and perform tasks with a higher success rate than AIs without imagination. Sorry if I made you click because you wanted AIs predicted flying cars. I promise this is cool too.
Scientists at MIT are using Wi-Fi and AI to determine your emotional state. They’ve created an algorithm that can detect and measure individual heartbeats by bouncing RF signals off of people.