Venture Capital Report - Dow Jones & Company

Venture Capital Report

U.S. | 4Q | 2018

VENTURE CAPITAL REPORT

VENTURE CAPITAL REPORT

The following report presents Dow Jones VentureSource¡¯s quarterly findings for U.S. venture capital investment, fundraising, and liquidity. The included

charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 4Q 2018 include:

?

A long-building tsunami of VC cash crested in 4Q, obliterating all quarterly and annual records for equity investment.

?

VC fundraising surged again with the fourth-largest quarter on record, helping to end 2018 with the biggest annual haul in 18 years.

?

The M&A market had its second-best quarter on record, catapulting 2018 as the top year ever for both the number of M&A transactions and the

amounts paid.

?

VC-backed companies going public had a more mixed quarter, but ended 2018 as the best year for IPOs since 2014.

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The San Francisco Bay area took 61% of all capital invested into U.S. companies in 4Q, by far the most extreme regional concentration ever seen.

(The Bay Area average dating back to 1992 is 33%.)

VENTURE CAPITAL REPORT

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UNPRECEDENTED QUARTER AND YEAR BREAKS

RECORDS FOR U.S. EQUITY INVESTMENT

FINANCING

In a year when every single quarter set a new all-time

record for equity investment, the final quarter managed to

leap 33% above 3Q¡¯s already staggering figure for capital

raised. Altria Group¡¯s $12.8 billion financing for Juul Labs

Inc. played a critical role in this, comprising nearly 30% of

4Q¡¯s total. Indeed, the Juul deal ranks as the largest equity

round in a VC-backed company ever.

Although the number of rounds dipped 14% since 2Q¡¯s

high-water mark (the most active quarter since 2Q 2000), a

relatively small number of mega deals pushed the

investment totals to ever-increasing heights.

2018 ended the year with $130.39 billion in all, a 50%

increase from the previous year, and breaking the record

set in 2000 during the dot-com bubble.

Equity Financings in U.S.-Based,

VC-Backed Companies (2015¨C2018)

$45.00

1600

$40.00

1400

$35.00

1200

$30.00

1000

$25.00

800

$20.00

600

$15.00

400

$10.00

200

$5.00

$0.00

4Q'15

1Q'16

2Q'16

3Q'16

4Q'16

1Q'17

2Q'17

3Q'17

4Q'17

1Q'18

2Q'18

3Q'18

0

4Q'18

Amount Raised ($B) $23.67 $16.48 $19.36 $19.76 $14.21 $19.66 $21.46 $23.82 $22.10 $27.03 $28.13 $32.22 $43.01

Number of Deals

1397

1316

1319

1378

1246

1436

1462

1434

1336

1534

1555

1451

1343

VENTURE CAPITAL REPORT

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TOP ROUNDS FOR VC-BACKED COMPANIES (4Q 2018)

FINANCING

Close Date Round Type Raised ($M)

Round Investors

(* denotes lead)

12/20/2018

Corporate

Equity

$12,800.00

Altria Group Inc.*

Provider of various

video games.

10/26/2018

Growth

Equity

$1,250.00

Vulcan Capital, Smash Ventures, Lightspeed Venture

Partners, Kohlberg Kravis Roberts & Co. LP*, Kleiner Perkins

Caufield & Byers, Iconiq Capital LLC, aXiomatic

Industrial

Goods and

Materials

Manufacturer of largescale architectural

glass.

11/2/2018

VC Later

$1,100.00

SoftBank Vision Fund*

Consumer

Services

Operator of a local

grocery shopping

application and

delivery service.

10/16/2018

Other

Equity

$871.00

Valiant Capital Management LP, Tiger Global Management

LLC, D1 Capital Partners*, Coatue Management LLC

Information

Technology

Provider of mobile

telematics and

analytics for usageand behavior-based

programs for road and

driver safety.

12/19/2018

VC 1st

$500.00

SoftBank Vision Fund*

Company Name

Location

Industry Code

Juul Labs Inc.

San Francisco,

CA

Consumer

Electronics

Electronics &

Computer

Hardware

Information

Technology

Provider of nicotine

vaporizers with

temperature control.

Epic Games Inc.

Cary, NC

Entertainment

Consumer

Information

Services

Consumer

Services

View Inc.

Milpitas, CA

Building

Materials/

Construction

Machinery

Machinery and

Industrial Goods

Maplebear Inc.

(DBA Instacart)

San Francisco,

CA

Shopping

Facilitators

Consumer

Information

Services

Cambridge Mobile

Telematics Inc.

Cambridge, MA

Communications

Software

Industry Segment Industry Group

Software

Brief Description

VENTURE CAPITAL REPORT

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INFORMATION TECHNOLOGY TAKES THE LION¡¯S SHARE

OF INVESTMENT IN 4Q

FINANCING

Information Technology companies received the largest share of equity deals

and dollars for both 4Q and 2018 as a whole. This marks the first year since 2014

that IT held the lead among industry groups. The $12.8 billion corporate equity

deal for Juul Labs, in the consumer electronics sector, represented 61% of the

quarter¡¯s total for IT.

Companies in the Consumer Services group were in second place for 4Q in terms

of capital raised, securing $6.42 billion in 205 deals. The top deal in this space

was a $1.25 billion growth equity round for Epic Games, a video game provider.

Business and Financial Services companies placed a strong third, securing $5.9

billion through 294 rounds. Snowflake Computing, a provider of cloud-based data

warehousing services, won the largest financing in this sector with a $450 million

Series F deal.

4Q 2018 Industry

Breakdown

By Number

428

of Deals

Business & Financial Services

294

Consumer Goods

Consumer Services

86

Energy & Utilities

Healthcare

55

205

Industrial Goods & Materials

19

248

Information Technology

4Q 2018 Industry

Breakdown

By Amount

Raised ($B)

Business & Financial Services

14%

Consumer Goods

3%

Consumer Services

15%

49%

1%

13%

Energy & Utilities

Healthcare

Industrial Goods & Materials

5%

Information Technology

VENTURE CAPITAL REPORT

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