2018 saw the highest level of venture capital funding in the US since the beginning of the millennium.
New figures from the latest PwC-CB Insights MoneyTree Report show that in 2018, the US enjoyed the highest level of venture capital (VC) funding since 2000. According to the research, annual US VC funding leapt to $99.5bn across 5,536 deals over the year.
While the funding reached an 18-year high, the volume of deals was in fact at its lowest since 2013. This appears to be down to larger ‘mega-funding’ deals of more than $100m each, driving the top figure higher, with smaller transactions slowing down.
Unicorns are becoming less rare
The US also saw a record number of new unicorns, with 53 US VC-backed companies surpassing the $1bn valuation milestone. The final quarter of 2018 set a quarterly record for new unicorns, with 21 VC-backed private firms hitting the mark.
The US also surpasses Asia for the second consecutive quarter looking at the most new unicorns in the final portion of the year. Asia had come out ahead in Q2 of 2018, but has since fallen behind. In Europe, only three companies achieved unicorn status in Q4 2018, an increase of just one compared to the two that hit the milestone in Q3.
Looking at the five largest US deals of 2018, healthcare software firm Zymergen walked away with a $400m funding deal thanks to investors Data Collective, SoftBank Group, Two Sigma Ventures and True Ventures. In second place at $300m was Automation Anywhere, receiving funding from sole investor SoftBank Group. Rounding out the top five were Tanium, ZipRecruiter and DataRobot.
The west coast of the US dominated the top five deals, with four out of five of the companies based in California, Boston’s DataRobot being the sole exception.
Middle-stage funding slowing down
2018 saw the US experience a high not seen since 2000, the final year of the dot-com bubble, which saw markets reach their pinnacle that March.
The report also noted that there is a clear slowdown in funding for middle-stage companies in both Asia and the US. Median later-stage deal size in Asia plummeted in Q4 from $100m to $61.5m. Europe, however, showed a quarter-on-quarter increase, growing from $14.1m to $20.5m in Q4.
‘Mega-round’ funding may beef up annual figures while early-stage start-ups generate a vast amount of hype, but this report indicates a decline in VC funding may be the reality of 2019 for many businesses, at least in Asia and the US.