For the first time since the Dot-Com boom of 2000, annual capital investment surpassed the $100 billion mark, setting new records in the VC industry.
Mega-deals ($100 million or more) took center stage last year, accounting for 46.6% of total deal value ($61.1 billion of $130.9 billion) while representing a mere 2.2% of deals (198 out of 8,948 deals).
Despite a serious decline in the number of angel and seed deals last year, the increasing number of deals sized $50 million or more caused median deal sizes and median valuations to soar. 2018 median deal size weighed in at $82 million.
2018: the Year of the Unicorn.
2018 also witnessed a record number of unicorns who raised a total of $44.5 billion in funds, accounting for 33.9% of total VC investment. These unicorns included promising tech startups, such as Uber, Lyft, WeWork, Airbnb, SpaceX, and many more.
Both the increase in median deal size and number of unicorns last year can be attributed to the rise of mega-funds, which aim to secure investment in top companies by outbidding the competition.
57% of capital raised last year came from VC mega-funds who hold at least $500 million.
As a consequence, we saw mega-funds competing with each other, drastically driving up the valuation of a handful of tech startups.
Startups weren’t the only winners in 2018, as General Partners (GPs) experienced a record-setting year. VCFs closed on $55.5 billion across 256 separate vehicles, making it the 5th year in a row that at least $34 billion was raised.
VC-backed exit activity flourished too, with the most VC-backed companies releasing IPOs since 2014. Exit value also reached its highest point in a decade, with the exception of 2012 when Facebook raised a historic $16 billion upon going public.
In the first half of 2019, many promising tech startups are expected release IPOs.
However, recent volatility in the public markets could mean that Uber, Lyft, Airbnb, and Slack will wait for the storm to pass before going public.
New legislation on foreign investment may also impact how VCs raise money from foreign LPs. The Foreign Investment Risk Review Modernization Act (FIRRMA) was recently amended to put minority investments in US companies under review of the Committee on Foreign Investment into the United States (CFIUS).
Nevertheless, 2019 is expected to follow in the previous year’s footsteps by breaking further records in fundraising, deal size, and exit value.
At Apogee Accelerator Group, we provide business acceleration services for companies seeking Series A to Series C funding. To learn more, please visit Apogee Accelerator Group’s page.