the result of Seed stage deals moving further into the venture lifecycle, rather
than an indicator that invested capital is shying away from funding early stage
companies.
On average, companies entering the Angel/Seed stage in 2017 are one full
year older than similar companies were 10 years ago (Figure 3). In addition,
the median Angel/Seed deal surpassed $1 million in size for the first time in the
past decade (see Figure 4). This trend has been extended by the proliferation
of accelerators and incubators, as well as the emergence of angel groups and
online platforms for angel investing or equity crowdfunding. The increased
investment opportunities prior to formal Angel or Seed funding have prompted
many seed-stage VCs to shift toward later and larger deals. This movement has
caused a domino effect in which investors at subsequent stages are interacting
with more mature businesses and making larger deals than they have historically.
"Series A is the new Series B" comments are not only becoming more common,
they are becoming more factually sound. In fact, year to date, the median early-
stage deal size of $6.1 million has surpassed the median late-stage deal size of
2010 ($6 million), marking another VC "first" that has been recorded this year.
It should be noted that deal maturation across all stages explains only part
of the transition we continue to see in the VC industry. Another notable trend is
that companies are continuing to remain private and delay exits in favor of raising
late-stage capital in the private markets, while continuing to capture market share
and build sound operational metrics. The last two quarters of 2017 mark just
the second time in the past decade that more than $20 billion was invested in
two consecutive terms – and total capital raised during this time is the highest in
history for similar timespans.
5
This is another indicator of investor selectivity and
an increase in mega rounds.
5
Venture Monitor 3Q 2017." Pitchbook and National Venture Capital Association, 28 Sept. 2017
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