As we head into the fourth quarter, PitchBook and the National Venture Capital Association released a new report showing venture capital investing is up nationally and in Illinois.
In Illinois overall, PitchBook's data shows that more than $509 million was invested across 63 deals in Q3 alone, up from $442 million in Q3 of 2017. Nationally, $27 billion was invested across 1,937 deals in Q3 of 2018, up from $24 billion across 2,240 deals in Q3 of 2017. With three quarters of the year complete, 2018 deal value on a national scale has already reached a decade high with $84.3 billion invested so far in companies across the country, showing the country is on track for a $100 billion year.
According to a Chicago specific report PitchBook released, the city has seen 155 funding deals close in 2018, totaling to more than $1 billion. It shows that Chicago's 2018 deal activity could match the tally of 2017, when $1.6 billion was invested into startups.
In Illinois, PitchBook's data shows that the $509 million invested across 63 deals in Q3 alone was up from Q2 when more than $295 million was invested across 56 deals. However, Q3 was down compared to Q1 of 2018, when about $525 million was invested across 74 deals in Illinois.
Some of the largest VC funding rounds include FourKites, which raised $35 million in February, Tempus, which raised $110 million in August and ShipBob, which has raised $40 million in September.
Additionally, the data shows that Chicago has seen at least 23 startup exits in 2018, like Aptinyx, SpringCM and Xeris Pharmaceuticals.
Of the local venture capital firms, Chicago-based Hyde Park Angels leads with the most funding deals at 92. But it is closely followed by Pritzker Group Venture Capital (87), Chicago Ventures (82) and Lightbank (61).
And Chicago proves to be a city where investors see a good return on their investments. PitchBook's data shows that Chicago startups give investors a median multiple on invested capital (MOIC) of 5.6 times, exceeding the city’s coastal counterparts, like Boston, New York and the Bay Area. The MOIC is calucated by dividing startup exit value by the total amount of venture capital raised by the startup.
Chicago’s closest competitor is Seattle, at 4.8 times, beating Los Angeles, at 4.7 times. New York follows at 4.4 times, the Bay Area at 4.2 times, and Boston at 3.6 times.
Nationally, the report shows that 378 funding rounds were $50 million or more so far in 2018. That’s more than the 292 deals of that size that closed altogether last year, a sign that more money is being invested across fewer deals.
“This phenomenon hasn’t been limited to just the large late- and growth-stage deals—it’s been at every investment stage and across most sectors,” the report says. “The result has been rising pre-money valuations, most notably for Series A financings, which have typically been less affected by frothy funding markets, but are now experiencing an unusually dramatic increase in valuations.”
Brent Wistrom contributed to this report.
