This document from Pitchbook provides an overview of trends in venture capital fundraising, deals, valuations, and exits based on their dataset. It shows that VC fundraising is off to a strong start in 2014, with mega-funds and micro-funds dominating. Deal activity has slowed recently while valuations have increased dramatically across stages. Software continues to be the most popular sector for investment. Exit activity has remained steady with IPOs making up a larger share in the first half of 2014.
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PitchBook Trends for ABA Angel VC Subcommittee Sept 2014
1. VALUATION TRENDS – ABA ANGEL VC SUBCOMMITTEE
pitchbook.com
SEPTEMBER 2014
ADLEY BOWDEN
SENIOR DIRECTOR, ANALYSIS
PITCHBOOK
adley@pitchbook.com
LEARN MORE ABOUT THE
PITCHBOOK PLATFORM AT
PITCHBOOK.COM
2. THE PITCHBOOK PLATFORM
GLOBAL COVERAGE OF THE ENTIRE PE & VC LIFECYCLE
13,582
pitchbook.com
LPs
70,291
Commitments
48,149
GPs/Investors
27,144
Funds
355,920
Performance
Data Lines
128,470
Portfolio
Companies
220,052
Transactions
14,774
Valuations
16,224
Advisory Firms
542,137
People
4. U.S. VC FUNDRAISING
BY QUARTER
» VC fundraising is off to a strong start in 2014, bolstered in part by six
new mega-funds ($1 billion+) that closed in the first half.
pitchbook.com
$4.0
$10.9
$4.0
$5.8
$8.7
$8.7
40
21
50
32
46
30
53 54
61
70
60
50
40
30
20
10
0
$12
$10
$8
$6
$4
$2
$0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2009 2010 2011 2012 2013 2014
Capital Raised ($B) # of Funds Closed
Source: PitchBook
as of 6/30/2014
5. VC FUNDRAISING (#) BY SIZE
» Significant structural changes may be underway in the VC industry, as mega-funds
($1b+) and micro-funds (>$50m) are beginning to dominate the market.
pitchbook.com
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$1B+
$500M-$1B
$250M-$500M
$100M-$250M
$50M-$100M
Under $50M
Source: PitchBook
as of 6/30/2014
7. GLOBAL QUARTERLY VENTURE CAPITAL
DEAL FLOW
Venture deal flow has tapered recently as a result of high valuations at » the early stage level
pitchbook.com
2,500
2,000
1,500
1,000
500
*Through 6/30/14
$7.9
$8.9
$15.3
$13.2
$12.2
$22.8
1,078
1,377
1,991
2,284 2,307
1,852
0
$25
$20
$15
$10
$5
$0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2009 2010 2011 2012 2013 2014
Capital Invested ($B) # of Deals Closed
8. U.S. VC DEALS BY STAGE
» Seed and angel deals have fallen precipitously in recent quarters.
pitchbook.com
502
433
182
Source: PitchBook
700
600
500
400
300
200
100
0
Early Stage
Late Stage
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2010 2011 2012 2013 2014
Seed/Angel Early Stage Late Stage Source: PitchBook
Seed
9. U.S. VC DEALS (#) BY SIZE
» Larger deals have also taken a larger share of deals than previous years.
pitchbook.com
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 1H
2014
$25M+
$10M-$25M
$5M-$10M
$1M-$5M
$500K-$1M
Under $500K
Source: PitchBook
10. U.S. VC DEALS BY SECTOR
» Investors have continued to increase their interest in software startups.
pitchbook.com
Source: PitchBook
939 253 110 142 167 661
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2014*
2013
2012
2011
2010
2009
2008
2007
2006
2005
Software Commercial Services Media HC Devices & Supplies Pharma & Biotech Non-Core VC
* As of 6/30/14
Source: PitchBook
11. MEDIAN PRE-MONEY VALUATIONS ($M)
BY SERIES
Increases in public markets, growth hungry strategics and changes in funding timelines has
caused venture company valuations to dramatically increase over the last five years »
$35.2
$12.1
$5.7
pitchbook.com
$171.5
$70.0
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
*Through 6/30/14
$4.7
$7.8 $6.6
$10.1
$22.9
$18.1
$26.0
$40
$35
$30
$25
$20
$15
$10
$5
$0
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
$48.9
$29.6
$55.9
$86.7
$49.0
$105.2
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
$0
12. PREVAL DISTRIBUTIONS –
SERIES A & B ($M)
Though valuations are rising across the board, valuations for the highest valued companies
have been increasing at a faster pace than those of lower valued companies »
$12.3 $12.0 $12.1
pitchbook.com
$37.2 $35.2
$80
$70
$60
$50
$40
$30
$20
$10
*Through 6/30/14
$4.5 $3.9 $4.8
$7.0
$16.5
$19.5
$25
$20
$15
$10
$5
$0
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
25th Median 75th
$13.5
$9.4
$13.2
$19.8
$31.2
$47.0
$74.5
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
$0
25th Median 75th
13. MEDIAN % ACQUIRED BY SERIES
Increases in valuations but steady funding sizes has resulted in a steady decline in ownership
stakes acquired across various funding rounds. »
pitchbook.com
*Through 6/30/14
36.5%
32.6%
27.5%
16.5%
13.8% 12.0%
40%
35%
30%
25%
20%
15%
10%
5%
0%
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
14. MEDIAN VALUATION STEP UP % FROM
PREVIOUS VC ROUND
Landing funding rounds after the seed stage offer significant increases » in valuation
pitchbook.com
*Through 6/30/14
157%
173%
119%
93%
200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
Seed to A A to B B to C C to D
15. MEDIAN PREVALS ($M) BY METRO AREA
As the hub of the VC universe, the Bay Area leads the nation in tech company valuations,
which is especially pronounced in the later stage rounds »
Seattle
pitchbook.com
*Through 6/30/14
ALL VC
$20
$15
$10
$5
$0
Austin
Bay Area
Boston
L.A. Chicago
EARLY STAGE
Seattle
London
New
York
ALL VC
$120
$100
$80
$60
$40
$20
$0
Austin
Bay Area
Boston
L.A. Chicago
London
New York
LATE STAGE
18. EXITS (#) BY TYPE
» The proportion of IPOs nearly doubled in 1H 2014, reaching the highest level since 2004.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
pitchbook.com
Source: PitchBook
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
4Q
3Q
2Q
1Q
2011 2012 2013 2014
Acquisition IPO Buyout Source: PitchBook
19. MEDIAN EXIT VALUATION ($M) BY TYPE
Though IPOs are a relatively rare exit, the benefit to » investors is clear
pitchbook.com
*Through 6/30/14
$139
$426
$278
$49 $57 $38
$450
$400
$350
$300
$250
$200
$150
$100
$50
$0
'05 '06 '07 '08 '09 '10 '11 '12 '13 '14
IPO Acquisition/Buyout
20. MEDIAN VALUATION STEP UP % FROM
LAST VC ROUND TO EXIT
More mature companies tend to see smaller increases » in valuation at exit
pitchbook.com
*Through 6/30/14
132.0%
95.7%
85.7%
51.7%
140%
120%
100%
80%
60%
40%
20%
0%
Series A Series B Series C Series D+