pitch book 2014_annual_u.s._vc_valuations_and_trends_report
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Bet ter Data. Bet ter Decisions.PitchBook
Median valuations for VC-backed companies are up across the board.PAGE 7»
U.S. VC VALUATIONS & TRENDS2014 ANNUAL REPOR T
PAGE 4: DE AL F L OW DOWN, CAPI TAL INVE S T ED UP PAGE 14: 20 13 L E AGUE TABL E S
Silicon Valley continues
to reign, but VC firms are increasingly making
deals in other regions. PAGE 8»
CONTENTSIntroduction
Overview
Deal Flow by Sector
Median Valuations
Regional Overview
Valuation Change Between Rounds
Exits Overview
Fundraising Overview
2013 League Tables
Methodology
34-5
67
8-910-11
12131415
CREDITS & CONTACTPitchBook Data, Inc.
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ContentJAMES GELFER Editor
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COPYRIGHT © 2014 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.
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Bet ter Data. Bet ter Decisions.PitchBook
Median valuations for VC-backed companies are up across the board.PAGE 7»
U.S. VC VALUATIONS & TRENDS2014 ANNUAL REPOR T
PAGE 4: DE AL F L OW DOWN, CAPI TAL INVE S T ED UP PAGE 14: 20 13 L E AGUE TABL E S
Silicon Valley continues to reign, but VC firms
are increasingly making deals in other regions.
PAGE 8»
Want to see more detail?The PitchBook Platform has thousands of valuations on individual companies and VC rounds waiting for you to explore. Find out more by emailing [email protected] or visiting pitchbook.com.
Introduction
1 , 4 82
4 ,06 7
36%
1 ,985
4 ,80 4
41%
1 ,8 7 7
4 , 4 3 1
42%
1 , 4 47
3 ,5 7 9
4 0%
1 ,080
3 ,03 7
36%
1 ,239
3 , 4 60
36%
990
3,235
3 1%
6 4 4
2,533
25%
4 95
2,3 4 6
21%
3 42
2,050
1 7 %
201320122008 20102006 2011
# OF
VALUATIONS
# OF
VC DEALS
% OF
DEALS WITH
VALUATIONS
2007 200920052004
COUNT OF VC VALUATIONS IN THE PITCHBOOK PLATFORM BY INVESTMENT YEAR
Venture capital (VC) deal activity fell slightly in 2013 but capital invested rose as investors
maintained the high level of activity seen in the previous two years. The 4,067 deals and $34.0 billion of capital invested in 2013 are the third highest totals over the last decade, but valuations were the big story last year, as the median pre-money valuation for deals at every stage reached a decade-high. Many investors have expressed concern over high valuations, but VC investors have not been deterred.
The breakdown of deals by stage was nearly identical to 2012, with early-stage financings accounting for about half of all VC rounds and angel/seed and late stage deals each comprising about 25%. At the sector level, software continues to drive deal flow, representing 38% of the VC transactions in 2013. Over the last decade, investors have been shying away from other areas of IT and pumping more capital into commercial services and sectors not typically associated with VC, particularly consumer-facing spaces like retail, apparel, nondurables and leisure facilities.
While rising valuations have made financings more pricey, they have also created an attractive environment
for exits. As with deal flow, exits were down slightly from their record levels in 2012 but remained strong in 2013. It was an especially strong year for IPOs, with 84 U.S.-based VC-backed companies going public. Twitter and other tech businesses garnered most of the media attention, but more than half of the VC-backed companies that went public in 2013 were in the healthcare industry, including a record 36 offerings for
pharma & biotech companies.VC firms closed 139 funds in 2013—
the most since 2007—but capital raised fell to its lowest level since 2009. This is a result of fewer massive funds being raised, which could be a positive for the industry in the long run, as a majority of the capital raised in recent years have flowed into a handful of mega-funds that rarely
execute the early stage deals that are the bedrock of VC investing.
When observing the data in this report, please keep in mind that these are preliminary figures for 2013.
We hope the information in this report proves insightful and informs your decision-making process in the coming quarters. If you have any questions, comments or suggestions, please contact us at [email protected].
Despite valuations climbing to record
levels, VC deal-making remained
strong in 2013.
3 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
OverviewVC DEAL FLOW BY QUARTER
VC deal flow fell by about 15% across all stages, breaking
a steady string of advances over the last several years. With 4,067 deals, however, 2013 is still one of the best years over the last decade. While the number of VC financings dipped slightly in 2013, capital invested remained strong at $34 billion—the third highest level in the last decade.
Quarterly deal activity has been remarkably consistent over the last year and a half, staying within a 100 deal range in all but one quarter. And although activity appears to have dipped significantly in 4Q, we expect that deal flow will ultimately be comparable to recent quarters as more deals are reported to us in the coming weeks.
VC investors continued to pump money into massive financing rounds in 2013, completing 30 deals of $100 million or more, which is the second most in the last decade and
a 36% uptick from 2012. Capital invested in late stage
deals eclipsed $20 billion for the first time ever in 2011 and has stayed above that watermark for the last two years, as investors—particularly those that raised mammoth funds in the mid- and late-2000s—look to deploy capital in proven companies with a clear path to exit. To that end, deals of $25 million or more have increased from 11% of late stage investments in 2009 to 21% in 2013, which is the highest proportion in the last decade.
A shortage of early stage deals and capital has been a concern for many in the VC community over the last several quarters, but the data suggests that these fears may be overblown. The number of early stage financings hit a decade-high in 2012, and while early stage deal flow was down 15% in 2013, investment declined by 15% in
Deal flow dipped slightly in 2013, but
capital invested held steady at $34B.
Source: PitchBook
VC DEAL FLOW BY YEAR
Source: PitchBook
$5
.6
$5
.6
$6
.2
$5
.5
$6
.4
$7.6
$6
.4
$6
.5
$10
.8
$9
.5
$9
.7
$8
.4
$8
.8
$9
.7
$8
.0
$7.6
$8
.0
$8
.2
$8
.6
$9
.2
778
707
757 795854
930
870 925
1,158
1,112 1,1201,041
1,274 1,295
1,1451,090
1,095
1,073
1,076
823
0
200
400
600
800
1,000
1,200
1,400
$0
$2
$4
$6
$8
$10
$12
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2009 2010 2011 2012 2013
Capital Invested ($B) # of Deals Closed
$23
.0
$26
.9
$3
8.4
$3
4.1
$3
4.0
3,0373,579
4,431 4,8044,067
2009 2010 2011 2012 2013
Capital Invested ($B)# of Deals Closed
4 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
VC DEAL FLOW BY STAGE
FIRST-TIME FINANCINGS
angel/seed rounds and 16% in late stage investments as well. Still, early stage financings have shrunk from as much as 59% of VC deal flow in 2005 to 44% in 2013.
The declining proportion of early stage deals can likely be attributed to the incessant rise of angel/seed stage deals by established VC firms over the last decade.
Capital invested in seed rounds
remained strong, however, as the median round size rose 15% from $1.3 million in 2012 to $1.5 million in 2013. The sudden popularity in angel/seed financings is the result of a confluence of factors, including the institution of simpler term sheets for these deals and the fact that it is cheaper than ever to get virtually any type of business up and running nowadays. In
addition, companies raising angel/seed capital are more developed than they have ever been, with the median pre-money valuation reaching an all-time high of $5.1 million in 2013.
The downturn in angel/seed rounds from VCs in 2013 resulted in 603 fewer companies receiving an initial round of financing than in 2012, a drop of 33%. Capital invested in first financings only fell by 16%, however, as VC firms placed fewer but larger bets with these companies.
Even though the decrease in first financings was dramatic, the 1,230 deals completed in 2013 was still the third highest total over the last decade.
0% 20% 40% 60% 80% 100%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Seed/Angel Early Stage Late Stage
$3
.58
$5
.49
$4
.76
$5
.48
$5
.15
$3
.22
$3
.67
$4
.92
$4
.93
$4
.13
697819
909
1,161 1,158923
1,151
1,621
1,833
1,230
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
$0
$1
$2
$3
$4
$5
$6
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Capital Invested ($B) # of Deals Closed
MEDIAN ROUND AMT ($M) BY SERIES
$1.0 $1.2 $1.3 $1.5
$3.0 $3.1$3.6
$4.2
$8.1$8.7
$10.0$9.3
2010 2011 2012 2013
Series Seed Series A Series B
$11.7$14.2 $13.0
$18.2
$15.0$16.0
$18.8$20.0
2010 2011 2012 2013
Series C Series D or Later
Source: PitchBook
Source: PitchBook
Source: PitchBook
5 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Deal Flow by SectorVC DEAL FLOW BY SECTOR
VC DEAL FLOW BY SECTOR
As the charts on this page reveal, several sectors
emerged as clear winners and losers when it came to attracting VC investment in 2013. The services sectors stood out in a year when many saw decreasing deal flow, with investment in commercial, consumer and healthcare services reaching all-time highs. Media deals, on the other hand, tumbled 36% after reaching a record level in 2012, and software was down as well, though is still at relatively high levels historically.
Energy is the area that has fallen the farthest from favor in recent years, with deal-making in 2013 hitting its lowest level since 2006. Deals for energy equipment and exploration, production & refining companies dropped to some of the lowest levels in the last decade, while investment in energy services remains fairly strong. Healthcare devices & supplies was another hard-hit sector, with deal flow declining by 25% year-over-year, likely due to the new devices tax that went into effect in January. Investment in healthcare technology systems, however, was robust with 95 VC deals in 2013.
Many investors have been exploring opportunities in areas less commonly associated with venture investing. Since 2004, nonsoftware IT has fallen from 21% of VC deals to just 6% in 2013 while consumer products & services has jumped from 8% to 17%. For example, 2012 and 2013 were the two best years ever for deal-making in the apparel & accessories, consumer nondurables and restaurants, hotels & leisure sectors—all of which are consumer sectors.
31%
32%
38%
21%
10%
6%
9%
9%
13%
24%
25%
19%
2%
5%
3%
14%
20%
21%
0% 20% 40% 60% 80% 100%
2004
2009
2013
Software Non-Software IT Commercial Services Healthcare Energy Other
SOFTWARE
626 966
1,555
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
COMMERCIAL SERVICES MEDIA
HEALTHCARE DEVICES & SUPPLIES
PHARMACEUTICALS &BIOTECHNOLOGY
183 262
528
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
181
343303
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
40
142110
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
59
188242
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
228
291 276
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
ENERGY
Source: PitchBook
Source: PitchBook
Early Stage Late StageSeed/Angel Total
6 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Median Valuations MEDIAN PRE-MONEY VALUATION ($M) BY SERIES
Valuations have been a hot topic for the VC industry in
2013—and with good reason. The median pre-money valuation reached a decade-high across all stock series in 2013. Late stage deals were particularly pricey, with the median valuation rising by 23% (to $62.6 million) for Series C rounds and 14% (to $105.2 million) for Series D or later. Valuations for late stage financings have exploded since 2009, coinciding with a steep rise in
round sizes. The median of Series C rounds is now at a decade-high of $18.2 million while the median Series D or later financing has returned to its 2007 apex of $20.0 million.
Nobody likes to discuss the dreaded “b” word in VC, with many investors dismissing suggestions of a “bubble” as prognostications by those with little understanding of the industry. And while the prices being paid for many companies with strong revenue and broad customer
bases can be justified, it is hard not to be skeptical when looking at some of the numbers. For example, Pinterest raised a $200 million Series D round in February at a $2.4 billion pre-money valuation and quickly tapped investors for another $225 million in October, with its pre-money valuation up more than 50% to $3.8 billion. Another obvious example is Snapchat, whose valuation ballooned from $76 million in February to nearly $2 billion in December.
$3.2
$5.1$7.0 $7.8
$6.6$9.4
$16.9
$23.2
$18.6
$27.1
$0
$5
$10
$15
$20
$25
$30
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Series Seed Series A Series B
$36.3
$50.6
$32.3
$62.6
$47.7
$103.9
$52.1
$105.2
$0
$20
$40
$60
$80
$100
$120
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Series C Series D or Later
2013 MEDIAN PRE-MONEY VALUATION ($M) BY SECTOR AND SERIES
SEED
SERIES C
SERIES A
SERIES D OR LATER
SERIES B
LEGEND
Software
HC Devices& Supplies
Media
CommercialServices
Pharma &Biotech
Energy
$5.0 $4.8$6.0
$3.1
$5.6
$1.8
$9.5$12.1
$7.4
$10.6 $10.8
$6.1
$27.6$24.0 $25.0
$29.6 $29.1
$22.3
$62.5
$84.2
$41.8$54.7
$91.7
$62.6
$170
$114$90
$73
$188
$77
Source: PitchBook Source: PitchBook
Source: PitchBook
7 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Regional Overview MEDIAN PRE-MONEY VALUATIONS BY METRO AREA
While VC investing was down slightly across the country, there
were some standouts in 2013. Among the states with at least 50 investments last year, Connecticut and Florida led the way with the highest percentage increases in VC deal flow from the year before. Activity in California, New York, Texas and Washington dropped only slightly. And states that normally don’t come to mind when discussing VC, such as Nebraska and New Mexico, saw solid gains in 2013.
But where deal flow was down, it was down dramatically. Massachusetts saw a 23.5% decline in the number of VC investments it attracted in 2013 compared to 2012; while Missouri, North Carolina, Tennessee and Wisconsin—states that had at least 50 deals in 2012—were all down more than 30% in 2013.
for healthcare companies. CT Innovations was responsible for 24, or 77%, of the state’s healthcare and biotech financings in 2013.
Wisconsin
The Badger State saw a startling 52.7% drop in VC deal-making from 2012 to 2013 (74 rounds to 35). Wisconsin had been making strong gains since the financial crisis to attract capital to invest in local startups, particularly in the Madison
Connecticut
The story of VC investing in Connecticut is inexorably tied to Connecticut Innovations, the Rocky Hill, CT-based VC firm formed in 1989 by the state legislature in Hartford to invest in high-tech, healthcare and cleantech startups in the Constitution State. The firm completed 58 VC deals in Connecticut in 2013, good for 73% of the state’s overall total of 80 financings last year.
and Milwaukee areas. This translated into a 119% jump in the number of VC investments in the state from 2010 to 2011 and another 25% increase from 2011 to 2012.
There were just 35 closed VC financings in 2013, which was still the third-highest total on record. However, capital invested in Wisconsin companies last year dropped to $72.8 million from $124.8 million in 2012. In 2011, the state attracted $159.6 million in VC investment across 59 deals.
Among the states with more than 50 VC investments in 2013, Connecticut saw the largest percentage growth in deal count from the previous year, with most of that growth coming from CT Innovations. The firm completed 28 deals in 2012, when the state finished with 65 VC financings.
Much of this growth has been due to an increase in healthcare technology and biotechnology investing, as 39% of Connecticut’s VC financings in 2013 have been
New York City
VC investing in the Big Apple dropped in 2013, from 485 deals in 2012 to 423 last year. The decline was most pronounced among seed/angel financings. There were just 140 such rounds in 2013, down from 191 the year before.
Valuations in the NYC area are still fairly high though, particularly among late stage deals, as valuations for Series C and Series D or above hit a staggering $199 million last year.
65 | 2012 deal count
80 | 2013 deal count
LEGEND
Metro Area or State
65
80
106
89
100
106
74
35
68
45
1,376
1,246
169
156
301
229
485
423 385
301
103
87
DEAL COUNT BY METRO AREA AND
SELECT STATES (2012 & 2013)
SEED (2013, $M)
EARLY STAGE (2013, $M)
LATE STAGE (2013, $M)
$0 $1 $2 $3 $4 $5 $6
Seattle
Los Angeles
Boston
Bay Area
Austin
New York
$0 $4 $8 $12 $16 $20
Seattle
Los Angeles
Boston
Bay Area
Austin
New York
$0 $25 $50 $75 $100 $125 $150 $175 $200
Seattle
New York
Los Angeles
Boston
Bay Area
Austin
Source: PitchBook
Source: PitchBook
9 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Valuation Change Between Rounds
UP, FLAT & DOWN ROUNDS BY QUARTER
UP, FLAT & DOWN ROUNDS BY YEAR
With pre-money valuations rising across the board, it’s no
surprise that up rounds have been more prevalent in recent years. There has been little deviation in up, flat and down rounds in recent quarters, with about three of every five VC rounds completed over the last three years at a higher valuation than the previous financing. This is certainly higher than in the years following the financial crisis but is still not back to pre-crisis levels, when roughly three-quarters of VC deals were executed at higher valuations than the last round, which may explain why many people are not expressing concern about an impending bubble. Flat rounds have also accounted for a healthy share of the deals, which has resulted in down rounds comprising less than 20% of VC deals during each of the last three years.
But as we have seen multiple times, valuations don’t defy gravity and cannot be in an upward trajectory forever. To that end, the fact that valuations are so high right now could likely result in more flat and down rounds in coming years as some companies will inevitably struggle to meet the lofty expectations built into current prices. This is why some prominent VC investors have recently advised entrepreneurs to not be too greedy in seeking high valuations, which can make raising a subsequent round more difficult.
Valuations have been shooting up since hitting a floor in 2009.
About three of every five VC rounds over the last three years have been at a higher valuation than the previous financing.
0%
20%
40%
60%
80%
100%
1Q 2Q 3Q4Q 1Q 2Q 3Q4Q 1Q 2Q 3Q4Q 1Q 2Q 3Q4Q 1Q 2Q 3Q4Q
2009 2010 2011 2012 2013
Up Flat Down
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Up Flat Down
Source: PitchBook
Source: PitchBook
10 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Liquidation participation used to be the norm for VC deals as investors looked to mitigate the risk of their investments, particularly in flat or down rounds. But in the years since the financial crisis, term sheets have become more entrepreneur-friendly and fewer deals are incorporating liquidation participation and other mechanisms designed to ensure returns for investors. A higher rate of up rounds has certainly played a part in this trend, but it appears that liquidation participation is falling from favor even in flat and down rounds.
FEWER INVESTORS ARE USING LIQUIDATION PARTICIPATION IN THEIR VC DEALS
% CHANGE IN VALUATION FROM PREVIOUS RND
UP, FLAT & DOWN ROUNDS BY SECTOR
But even though valuations were at record levels in 2013, they are climbing slower than they have in recent years, resulting in slightly smaller bump ups in valuation between rounds.
As has historically been the case, VC-backed companies are experiencing their biggest bump up in valuation between their Series A and Series B rounds. With the high level of valuations, many companies have been tapping investors for large rounds of capital in quick succession when a successful exit is imminent. Given this trend, it makes sense that the valuation step-up for Series C and Series D or later rounds has fallen somewhat in 2013.
0%
20%
40%
60%
80%
'04 '05 '06 '07 '08 '09 '10 '11 '12 '13
Participating Non-Participating
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
'09 '10 '11 '12 '13 '09 '10 '11 '12 '13 '09 '10 '11 '12 '13 '09 '10 '11 '12 '13 '09 '10 '11 '12 '13
Software Commercial Services HC Devices &Supplies
Pharma & Biotech Media
Up Flat Down
0%
10%
20%
30%
40%
50%
60%
2009 2010 2011 2012 2013
Series A Series B Series C Series D or Later
Source: PitchBook
Source: PitchBook
Source: PitchBook
11 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Exits Overview
VC EXITS (#) BY TYPE
VC EXIT FLOW BY YEARExit activity started slow in 2013 but gradually accelerated
throughout the year. The total number of exits fell 13% from the record-high level in 2012 but was still relatively high by historical standards. The 43% drop in capital exited appears extreme at first blush, but it is important to consider that IPOs accounted for 15% of exits in 2013, up from 8% in 2012. Companies that are taken public typically generate smaller sums on the initial exit but tend to carry high valuations and offer the opportunity for additional liquidity for investors down the road. Also keep in mind that the 2012 exit totals include Facebook’s massive $16 billion IPO.
Another key factor in the declining amount of capital exited was a lack of billion-dollar acquisitions. Just two companies that were acquired in 2013 (Tumblr and Mandiant) carried a price tag of $1 billion or more, compared to six in 2012. It wasn’t just large acquisitions that were down in 2013, though. Corporate acquisitions fell 19% in 2013—hitting the lowest point since 2009. This dropped corporate acquisitions to just 74% of VC exits, matching the second lowest proportion over the last decade.
In 2013, VC-backed companies completed IPOs at a pace not seen
since the dot-com bubble, with 84 companies going public. But unlike in 1999 and 2000, when VC firms took more than 130 companies public each year, there was a high level of sector diversity. More than half (54%) of the companies that had IPOs in 2013 operate in the healthcare industry, including 36 pharma & biotech companies—the most ever.
Source: PitchBook
Source: PitchBook
More than half of the VC-backed IPOs in 2013 were in healthcare.
One statistic that won’t show in the charts on this page but was a big part of the liquidity story in 2013 is secondary offerings, where VC firms sell shares in companies they previously took public. The 21 secondary offerings completed in 2013 resulted in an additional $3.53 billion for VC investors, including significant realizations in Pandora, Zillow, Stratasys and Marketo.
$23
.8
$16
.2
$26
.6
$4
8.6
$19
.2
$13
.4
$26
.6
$3
6.7
$5
1.5
$29
.2
333349
408
492
381
402
592 599657
574
0
100
200
300
400
500
600
700
$0
$10
$20
$30
$40
$50
$60
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Capital Exited ($B) # of Exits
74%
86%
88%
83%
84%
81%
74%
10%
12%
10%
10%
9%
11%
11%
16%
3%
2%
7%
7%
8%
15%
0% 20% 40% 60% 80% 100%
2007
2008
2009
2010
2011
2012
2013
Corporate Acquisition PE Buyout IPO
12 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
Fundraising Overview
VC FUNDRAISING (#) BY FUND SIZE
VC FUNDRAISING BY YEARThe strong exit environment and large distributions to LPs
seemed to improve the fundraising prospects for many VC firms in 2013, as investors were able to close 138 funds—the most since 2007. Capital raised did fall to a four-year low of $17.2 billion, but this is not necessarily a bad thing for the industry. Many in the VC community have expressed concern about the burgeoning size of VC funds, with the average fund size climbing to $290 million in 2011. This trend has concentrated capital with a few top performers, making it more difficult for many smaller firms to raise funds and creating a dearth of capital for early stage deals.
The shift to larger funds has reversed in the last two years, however, as only seven funds closed with $500 million or more in 2013—the fewest in more than a decade. As a result, more than half of the funds raised in 2012 and 2013 had less than $50 million in capital, which is the first time this has happened in the last decade. And in 2013, funds of $500 million or more only comprised 5% of VC funds—the fewest since 2005.
Perhaps even more importantly, the capital flowing into VC funds is being dispersed more evenly. Funds of $500 million or more attracted more than half of the capital raised in 2011 and 2012, but their share fell to about one-quarter (28%) in 2013. At the same time, funds with less than $250 million in capital accounted for more than a third (36%) of the capital raised for the first time since 2004. As such, the average fund size fell to $126 million in 2013, which is its lowest point since 2004.
Heading into 2014, there are several prominent investors looking
to take advantage of the favorable fundraising climate, including Khosla Ventures, Sequoia Capital, Technology Crossover Ventures, KPCB and Draper Fisher Jurvetson. Several new firms are also looking to raise capital for the first time,
including G20 Ventures, a Boston-based firm founded by former partners at Advanced Technology Ventures, and Brooklyn Bridge Ventures, which is led by Charlie O’Donnell, a veteran of Union Square and First Round Capital.
$16
.8
$25
.7
$27.7
$3
6.7
$26
.9
$12
.2
$18
.0
$22.4
$19
.9
$17
.3
157
175
151 153133
75
101
81
124139
0
20
40
60
80
100
120
140
160
180
200
$0
$5
$10
$15
$20
$25
$30
$35
$40
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Capital Raised ($B) # of Funds Closed
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$1B+
$500M-$1B
$250M-$500M
$100M-$250M
$50M-$100M
Under $50M
Source: PitchBook
Source: PitchBook
13 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
SEED/ANGEL
500 Startups
Y Combinator
TechStars
SV Angel
Andreessen Horowitz
Google Ventures
Connecticut Innovations
CrunchFund
First Round Capital
Lerer Ventures
Atlas Venture
Great Oaks Venture Capital
Greylock Partners
Rothenberg Ventures
Portland Seed Fund
Entrepreneurs Roundtable
Founders Fund
FundersClub
Healthbox
MuckerLab
Rock Health
81
60
49
31
29
27
18
18
17
17
16
15
14
13
11
10
10
10
10
10
10
INVESTOR DEALS
EARLY STAGE LATE STAGE
INVE S T ORS
L AW F IRMS
All league tables are compiled using the number of completed VC deals for U.S.-based companies in 2013. Deals in which a firm advised multiple parties will only be counted once for that firm. To ensure your firm is accurately represented in future PitchBook reports, please contact [email protected].
2013 VC Deal League Tables
Andreessen Horowitz
Google Ventures
First Round Capital
Connecticut Innovations
New Enterprise Associates
500 Startups
SV Angel
Founders Fund
General Catalyst Partners
Khosla Ventures
Lightspeed Venture Partners
Accel Partners
Battery Ventures
Social+Capital Partnership
KPBC
Lerer Ventures
Sequoia Capital
Greylock Partners
Draper Fisher Jurvetson
Bessemer Venture Partners
True Ventures
Sequoia Capital
KPCB
Intel Capital
New Enterprise Associates
Draper Fisher Jurvetson
Andreessen Horowitz
Norwest Venture Partners
Interwest Partners
Battery Ventures
Bessemer Venture Partners
First Round Capital
Index Ventures
US Venture Partners
Accel Partners
Benchmark Capital
Greylock Partners
Ignition Partners
Khosla Ventures
Menlo Ventures
Venrock
46
41
35
34
34
33
30
27
27
27
27
26
25
25
24
24
23
21
20
19
17
29
27
24
24
23
20
19
16
15
15
15
15
15
14
14
14
14
14
14
14
INVESTOR INVESTORDEALS DEALS
EARLY STAGE LATE STAGE
Wilson Sonsini
Gunderson Dettmer
DLA Piper
Goodwin Procter
Cooley
Perkins Coie
Orrick Herrington & Sutcliffe
Morgan Lewis & Bockius
DLA Piper
Wilson Sonsini
Gunderson Dettmer
Cooley
Goodwin Procter
Fenwick & West
Morgan Lewis & Bockius
Jones Day
121
106
76
47
41
30
28
20
113
107
96
77
56
47
25
24
FIRM FIRMDEALS DEALS
League TableMethodology
Source: PitchBookSource: PitchBook
Source: PitchBook
Source: PitchBook
Source: PitchBook
14 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
MethodologyVENTURE CAPITALVenture capital, for the purposes of this report, is
defined as institutional investors that have raised
a fund structured as a limited partnership from
a group of accredited investors, or a corporate
entity making venture capital investments.
VALUATIONS Pre-Money Valuation: the valuation of a company
prior to the round of investment
Post-Money Valuation: the valuation of a
company following an investment
Up, Flat & Down Rounds: indicates whether the
valuation of a company during a specified round
was higher (up), lower (down) or the same (flat)
as the previous round of financing. To determine
the change in valuation, PitchBook compares the
change in the price per share of preferred stock
from one round to another.
SERIES TERMSLiquidation Preference: a distinction given to
a class of preferred stock in which that stock
receives proceeds prior to other classes of stock
during a liquidity event. Note that in the event
of an IPO, all preferred stock will be converted
to common stock and the liquidation preference
will be irrelevant. The liquidation preference is
typically capped as a multiple of the investor’s
original purchase price. Since 2004, the median
participation cap has been 3.0x. PitchBook
classifies liquidation preferences as follows:
Senior: when a particular class of preferred
stock has liquidation priority over all other stock
classes
Pari Passu: when all classes of preferred stock
have equal liquidation rights
Complex: any circumstance that does not fall
under senior or pari passu
Liquidation Participation: a distinction given to
a class of stock that outlines how the specified
stock series will participate in the liquidation
proceeds after the payment of the liquidation
preference. Stocks may have one of three types
of participation:
Uncapped Participation: following the payment
of the liquidation preference, all of the remaining
assets will be distributed ratably among the
common and preferred stock
Capped Participation: following the payment of
the liquidation preference, the remaining assets
will be distributed ratably among the common
and preferred stock until the specified stock
class reaches a predetermined multiple of the
original purchase price
Non-Participation: following the payment of the
liquidation preference, the specified stock class
will not participate in the distribution of the
remaining assets
EXITSThis report includes both full and partial exits via
mergers and acquisitions, private equity buyouts
and IPOs. .
FUNDRAISINGThis report includes all U.S.-based venture
capital funds that have held a final close. Fund-
of-funds and secondary funds are not included.
15 PITCHBOOK 2014 ANNUAL
VC VALUATIONS & TRENDS REPORT
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