VCs loved mega-rounds in 2017, and DC was no exception - Technical.ly DC

Growth

Jan. 10, 2018 7:42 am

VCs loved mega-rounds in 2017, and DC was no exception

DMV companies posted four of the record-breaking tally of investment rounds over $100M last year, according to a new report from CB Insights and PwC. But there's another side to all of that cash going to a few companies.
Cash money.

Cash money.

(Photo by Flickr user Pictures of Money, used under a Creative Commons license)

It was a year of big money, as venture capitalists participated in a record number of mega-rounds across the U.S. in 2017.

PwC and CB Insights consider a mega-rounds to be an investment in a company that tops $100 million. In all, the two entities said in the latest MoneyTree report that the U.S. saw 109 such deals last year.

Companies in the D.C. area played a part in running up that total. The fourth quarter alone saw three such deals with Arlington, Va., satellite broadband company OneWeb’s out-of-this-world $500 million round, Bethesda, Md.–based Precision Medicine Group’s $275 million round and MapBox’s $164 million round. It capped a massive $1.2 billion quarter for the area, which was about as high as the other three quarters combined. You know it’s a good quarter when ThreatQuotient’s $30 million round was only the fifth-highest deal.

“2017 closed strong because of mega-round activity – a theme throughout the year. It was a record year for these mega-rounds and was driven by what we’d describe as the Softbank Effect,” CB Insights CEO Anand Sanwal said in an analysis. “This is the entry of large, deep pocketed investors, ranging from Softbank to sovereign wealth funds from around the globe investing in insurgent startup companies.”

The Softbank Vision Fund was involved here, too, leading rounds for OneWeb and MapBox.

There was one other mega-round throughout the year as well, as edtech company EverFi raised $190M, led by the Rise Fund.

However, there was another side to that equation. While the amount dollars went up, the number of startups funded around the country went down.

For the entire DMV, the number of deals did indeed decrease from 204 in 2016 to 185 in 2017. But so, too, did the overall total funding, from about $2.7 billion in 2016 to $2.4 billion in 2017.

We tech journalists typically peruse such reports to see any early-stage deals we might’ve missed, but the big money rounds meant that anything under $12 million wasn’t even listed for Q4. So NEA’s investment in data privacy startup Wirewheel didn’t even make the cut.

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In fact, there are fewer such rounds for earlier stage companies, said Sanwal. As Techcrunch reported, the decrease is now a three-year trend. But there could be a correction in 2018.

“Deals are still being completed, especially the bigger ones, but the early-stage activity which is vital to the VC ecosystem’s health did take a hit,” Sanwal said. “There is a lot of early stage (seed capital) that has been raised so it’s likely to bounce back.”

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