Venture capital funding surges thanks to megarounds
Venture capital funding in the U.S. in on track to hit a potential new record high in 2019 thanks to a rising number of megarounds.
That’s according to data from the latest quarterly PwC/CB Insights MoneyTree Report released early Tuesday, which found increasing inflows of capital into startups.
For the first half of the year, funding into startups came in at $55 billion, higher than at the same point last year. In 2018 $116 billion was invested into U.S. startups, the highest recorded figure since 2000, the last year of the dot-com bubble when $120 billion was invested.
Megarounds were the story of the quarter, with a record 64 venture capital rounds of more than $100 million accounting for nearly half of all money invested. The megarounds during the quarter also created 19 new unicorns, or companies with an on-paper valuation of $1 billion or more, near to the record of 22 new unicorns created in the fourth quarter of 2018.
The total number of unicorns now sits at an all-time high of 167, this despite a number of previous unicorns leaving the list after going public.
Reflecting a similar finding from the latest PitchBook-NVCA Venture Monitor quarterly report last week, the MoneyTree report noted the increasing number of IPO exists, recording 33 in the quarter, the highest number in eight quarters. Key IPOs during the quarter included Uber Technologies Inc. Pinterest Inc. and Zoom Communications Inc.
Mergers and acquisitions were mostly flat in the quarter, with 163 exits, one more than in the first quarter. The figure is down somewhat from the 183 exits recorded two quarters ago.
The numbers in the report were not all positive, however. Seed funding rounds — money invested into early-stage startups — dropped to the lowest level since the first quarter of 2014, with only 364 deals. The slowing number of seed investments presents a risk of slowing venture capital investments in future years since there will be a smaller number of startups seeking later stages of funding.
Outside of the U.S., venture capital investment declined. Asia came close to matching U.S. numbers last year but saw a 24% drop this quarter. There were 1,169 deals recorded there during the quarter versus 1,519 in the U.S. Europe recorded 786 deals in the second quarter, with its quarterly trend fairly flat.
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