One thing is clear: The market for startup equity is on firmer footing now than it was three months ago. With two successive quarters of growth, both in the number of deals struck and the amount of money invested, as well as a growing appetite on the part of public markets for shares in venture-backed startups, there’s reason for cautious optimism going into the second half of this year.
Using data and projections from Crunchbase, this report from Crunchbase News dives deep into the state of the global venture capital ecosystem. Here, we want to assess investment and liquidity — money in versus money out.
In the Money in section we’ll cover Crunchbase’s projections of how — and how much — the global venture capital ecosystem invested in Q2 2017. We’ll then evaluate how that result compares to both Q1 2017 and Q2 2016, giving us perspective on sequential quarter and year-over-year performance.
In the Money out section we’ll review acquisition statistics and highlight other notable liquidity events, including the thawing market for technology IPOs.
To help you digest this report, each section will contain a bullish and bearish key finding. Without further ado, let’s dive in.
- Bullish key finding. Both deal and dollar volume are up across almost all stages, and round sizes continue to grow. Across most measures, the global VC market is on track to return to previous highs by the end of this year, if growth continues.
- Bearish key finding. Despite growth in dollar and deal volume, measures of late-stage financings suggest a return to historic highs will be slower to come. Also, very late-stage technology growth equity rounds have continued a multi-quarter downtrend.
An overview of the venture capital landscape
In the second quarter of 2017, the global venture capital industry continued the trajectory set by the first quarter, one of recovery from a slump in the second half of 2016 due to looming uncertainty.
Between concerns over ballooning and seemingly unsustainable valuations of the U.S.’s largest private tech companies, a stopped-up tech IPO market, the contentious presidential election in the U.S., the referendum for the United Kingdom to leave the EU, the endless and intractable Euro crisis and roiling financial markets in China, among other issues, it’s surprising that the global venture capital market didn’t slow down even more.
Now, for better and worse, many sources of uncertainty have come to a head, and investors have seemingly adjusted to the new normal. Q2 2017 was all about extending the gains made in the first quarter of the year.
Global funding activity: A view from cruising
To provide an overview of the state of venture finance around the world, we examined the number and volume of venture deals. The scope of analysis presented in this section is broad and high-level. It includes the number and size of venture capital deals and a quick look at some of the investors who’ve led the most deals.