Venture capital investments into startups are set to experience a record-breaking year, according to the latest quarterly report from the PitchBook-NVCA Venture Monitor.

The report, which monitors venture capital activity, found that $8 billion was raised in the first quarter of this year, a slight decline from previous quarters. Although that’s obviously not record activity, the other notable figure from the report found investors deployed the highest amount of capital in the quarter since 2006. They put that money into new billion-dollar “megafunds” that will use that money to invest in tech companies, hence the prediction of a record year.

Despite a recent surge in initial public offerings, the report found that the exit market for venture-backed companies remained sluggish in the first quarter. But several deals did drive up value, including Amazon.com Inc.’s acquisition of smart doorbell maker Ring Inc. for $1.2 billion Feb. 27 and DropBox Inc.’s $756 million IPO March 22.

“The first quarter of 2018 picked up right where 2017 left off, with the largest amount of capital deployed into venture-backed companies in a single quarter since 2006, marking a very strong start to venture investment this year,” Bobby Franklin, president and chief executive of the National Venture Capital Association, said in a statement. “As we look ahead to the rest of the year, [the first quarter] appears to be indicating a strengthening exit environment, which would bring liquidity to LPs and could lead to an uptick in fundraising, and in turn lead to even higher levels of investment activity.”

The report found that venture fundraising paced below 2017 levels, with $7.9 billion committed across 54 vehicles with a growing demand for microfunds seeing a decline in median fund size – down from $50 million in 2017 to $38 million in the first quarter of 2018.

By investments, $28.2 billion was put into venture-backed companies across 1,683 deals. That’s the highest amount of capital deployed in a single quarter since 2006, with 113 financings over $50 million, representing 14 percent of total deal values and the first quarter to surpass 100 financings over $50 million.

The size of funding deals also rose, with the average early-stage deal 65 percent higher than in 2017, while the average late-stage deal tracked 42 percent higher. Investments in unicorns, or startups with private valuations higher than $1 billion, accounted for $5.2 billion in new capital, or slightly over a quarter of capital deployed in the quarter.

Larger rounds going into late-stage startups prompted fewer exits, which are described as being “sluggish.” About $8.1 billion in exits across 188 reported deals in the quarter constituted the lowest exit count since the first quarter of 2013.

“While median time to exit has certainly increased, we’ve noticed VCs have distributed capital back to LPs at a record pace, which is reflective in the larger exits that have come to market,” said John Gabbert, founder and CEO of PitchBook. “The venture industry is poised to continue its healthy pace of dealmaking, especially when combined with the increased participation of nontraditional investors and the boost in pre-seed capital.”

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