Venture Capital Deals Bust Previous Records in Q2

The average value of series A-C deals in the first half fell from 2016 levels. However, average series D (round four and later) deal size hit a record $99 billion.

Deals in software accounted for 31% of deal volume, followed by internet at 20% and healthcare at 14%, while telecoms deals represented the largest share of total deal value, 25%.

Preqin noted that despite robust activity, capital available to venture capital fund managers rose to a record $176 billion in the first half of the year.

Exit activity contrasted sharply with deal making in the second quarter, with just 244 exits recorded globally worth a combined $14 billion. This was down from $18 billion recorded for 293 exits in the first quarter.

Trade sales account for 62% of exit volume and 73% of value.

Thirty-three venture capital-backed IPOs were announced in the quarter, worth 30% of overall exit value.

The largest announced exit was the $3.4 billion sale of Chewy, an online retailer of pet food and other pet-related products, to PetSmart in April.

“With an increasing number of companies choosing to stay private rather than being sold or going public, it is perhaps not surprising that we have seen a slowdown in the volume of exits since they last peaked in the latter part of 2015,” Egidio said.

“However, venture capital funds, unlike private companies, have defined lifespans after which investors will expect to see return from their investments. Fund managers will be looking for exit activity to regain some momentum in the coming quarters, or they may have to start looking for alternative ways to release capital back to investors.”