Despite two whole months still remaining in the year, Venture Capital dealmaking in the U.S. has just hit its highest point in a decade.
According to recent data from Pitchbook, a financial data and software company, VC investment into U.S.-based companies reached $27.8 billion in Q3 of 2018.
This places the annual total at a whopping $84.3 billion, surpassing the entirety of 2017 which ended with $82 billion being invested.
Pitchbook’s quarterly publication, “NVCA Venture Monitor”, indicates that the source of these new funds came from an increase in median deal sizes at all stages. In fact, median deal sizes have shown double-digit growth from 2017.
Pitchbook’s 3rd quarter report suggests that the increase in deal sizes are due to “the growing number of mega-funds raised, as investors increasingly view larger vehicles as a competitive advantage to invest in high-quality startups”.
“Mega-funds” may indeed be the culprit, as we’ve witnessed the rise of record-breaking funds like Softbank’s Vision Fund, which seeks to snag the most promising startups in Silicon Valley.
Critics state that mega-funds like that of Softbank have shocked the VC market by using “outsized financings” as a competitive tool to attract startups. If correct, this sort of investment strategy may lead to inflating valuations and a reduction in ROI in real dollars.
Amidst fears of inflation in the VC market, PitchBook founder and CEO John Gabbert said, “There is a question of whether greater competition among investors and the general capital availability is a good thing – as investors may run the risk of overlooking company fundamentals and inflating valuations.”
“At the same time, the exit market appears exceptionally healthy so far this year, especially through its support of large exits at or above their last private valuation.”
Regardless of the impact on investors, startups can expect to enjoy the benefits of increased competition amongst VC firms. And along with larger funds, startups have more choices than ever.
With VC funds sitting on record amounts of money waiting to invest, it’s definitely a great time to be a startup.
At Apogee Accelerator Group, we get you ready for the next level of funding by helping you perfect your executive summary and your big pitch. We also pair you up with the right investors and provide you with a wide array of services to grow your business, ranging from Marketing and Social Media to Human Resources and Payroll.
So, if you’re currently considering—or even preparing—to approach investors for Venture Capital, visit Apogee Accelerator Group’s page to learn more.
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