$58 billion: That's the number of venture capital dollars invested in 3,912 companies so far in 2018.
In Atlanta specifically, $394.7 million was invested in 48 deals so far this year, with most of the funding coming in Q2. The US venture capital ecosystem is shifting shape and the new normal is one where capital is concentrated into fewer, larger deals.
More than 20 percent of total VC financing -- or $11.8 billion in 2018 -- was invested in VC-backed unicorns. Atlanta area unicorn startup Rubicon Global, valued at $1.06 billion, raised $116.6 million in May.
A fair warning before diving into the data: measuring startup funding is a fickle thing due to the timing of reporting with the Securities and Exchange Commission and because of how different venture capital monitoring groups gather information and categorize fundings. Meanwhile, deal flow in the first half of the year isn’t necessarily a yardstick for what happens in the second half.
The PitchBook-NVCA figures include investment from individual angel investors, angel groups, seed funds corporate venture arms and corporate investors. But it doesn't include initial fundings from accelerators.
Angel/Seed Funding
When it comes to seed funding, deal sizes have gotten larger dominated by two trends -- the emergence of pre-seed financing and the median age of startups. In Q2 2018, the median age of a company in the angel and seed stage rose to 3.11 years, up from 2.4 years in 2017, allowing for more time to develop successful business models and increase valuations.
Atlanta saw two seed rounds in Q2: $4 million into ATDC startup Cypress.io and $2.63 million in the Create-X storage startup Stord. The city had one angel investment in onQ for $6 million.
Early-stage
It’s not only angel and seed rounds that have gotten bigger. Early-stage deals have increased in value, too — deals over $25 million now make up more than 50 percent of 2018 early-stage deal value. Furthermore, the median amount of capital raised by companies at the Series A and B level has shown a steady growth pushing the median at Series A to $11.3 million and Series B to $29.3 million, representing a greater than twofold increase from 10 years ago, further illustrating the extreme shifts even at the early stage.
However, Atlanta had one early-stage investment: $10 million in DocAuthority.
Late-Stage
As mentioned earlier, late-stage deals have been getting a lot of attention. Another emerging trend is the increased activity by private equity (PE) investors as a result of increased competition in PE coupled with maturing venture-backed companies. VC financings with participation from a PE firm accounted for 30 percent of total deal value.
In Atlanta, we scored six late-stage VC deals, for a total of $306.12 million.
Exits/IPO
Carvana's acquisition of Car360 for $22 million was tied for the top exit of the quarter. Georgia alone has seen seven VC exits so far, for a little more than $100 million, according to the data.
Corporate VC
Thanks to the passage of U.S. tax reform in late December of 2017, corporates have turned into venture capitalists. A reduction in the US corporate tax rate from 35 percent to 21 percent has been a boon for firms’ free cash flow (FCF), providing corporations with additional capital to direct into CVC investments. Software and life sciences sectors continue to receive increased focus from CVCs.
Together, software and life sciences have received 62 percent of CVC deal count in 2018 so far.
