Series A Round Sizes Increased 68% Since 2008, On Trend With Economic Recovery & Bull Market

This post is part of our Startup Funding Benchmarking Series exploring the allocation, concentration, and macro trends in the financing of high growth startups.


Yesterday we published an analysis of year-over-year comparison of median VC funding round sizes by stage, revealing what many investors already know: round sizes are up significantly since July 2014, corresponding with an increase in private company valuations. We observed a “barbell effect” where late stage and Series A deal sizes have seen the most movement, and today’s analysis digs into Series A deal sizes from the beginning of 2008 to present.

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Looking at the graph, we observe that the average round size is always significantly higher than the median. The average peaked in mid June of 2015, where 33 of the past 90 Series A round sizes were recorded at $10 million or greater. Over the entire period, the median round size for a Series A has increased by $2.8 million, from $4.2 million in early 2008 to $7 million at the end of July 2015.

This 68% increase since 2008 has not occurred steadily, and may simply lag broader market conditions such as the ongoing impact of The Great Recession in late 2009 and 2010.

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2011 ended the year with median round sizes up just 1% from their 2008 level, in concert with a broader economic recovery, and 2012 continued on this positive momentum with the single largest jump in round sizes of the past 8 years.

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Source: Yahoo Finance

Savvy readers know that demonstrating a relationship between two trends does not prove that one series of events caused the other, so while we observe an increase in prices in tandem with an increase in broader economic growth it is important to consider other factors. Are the hurdles for raising a Series A round higher than they were in 2008? How has the volume of deal activity, and competition for those deals across a larger number of early stage funds, effected pricing? What other signals might we use to understand this trend? Stay tuned to our Startup Funding Benchmarking Series as we continue to explore these questions through data.


Methodology Note: In Graph 1 we present “90 Event Moving Average” and “90 Event Moving Median” measurements, which takes the average or median respectively of the past 90 funding events announced in chronological order. You may be familiar with measures such as a 90 *day* moving average, and we would like readers to note this difference. This was done for ease of analysis, and we believe it presents a meaningful set of information to inform against this trend.


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© Mattermark 2015. Sources: Mattermark Research, Crunchbase, AngelList.

Median Startup Funding Round Sizes Up 39% YoY, Lead By Late Stage & Series A Deals

This post is part of our Startup Funding Benchmarking Series exploring the allocation, concentration, and macro trends in the financing of high growth startups.


July saw a 39% overall increase in median round sizes compared to July of 2014. The largest increase occurred in late stage rounds, which were up 77% year-over-year.

Series A, B, and C rounds saw increases of 46%, 25% and 9% respectively.

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Mega rounds in the late stage category in July 2015 included $2 billion to Didi Taxi (Coatue Management, Tencent Holdings, Alibaba, Hillhouse Capital Group), $300 million to DraftKings ($300M USD from Kraft Group, The Walt Disney Company, Fox Investments), and $275 million to FanDuel (Comcast Ventures, Time Warner Investments, KKR, Google Capital).


July Round Medians Significantly Outpaced Year-to-Date Trend, Suggesting Valuations Are Still on the Rise

July median round sizes significantly surpassed the 2015 year-to-date trend of an overall 15% increase to median round sizes. While Series C and late stage rounds appear to have stabilized a bit more year-over-year, Series A and B rounds both continue to climb (+33% and +25% respectively).

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There has been a great deal of discussion about a “private market bubble” and we believe round sizes are often a useful indicator of higher valuations, as investors hold strong to their ownership requirements and compete for deals by offering bigger checks for the same amount of dilution, with a higher hurdle the company must meet before taking their next financing.

This is a developing trend, and we will continue to report as it progresses.

Looking for resources to help you research startups and venture capital? Sign up for a free trial of Mattermark Professional to access the underlying data for these graphs, as well as in-depth profiles of more than one million high growth companies.

© Mattermark 2015. Sources: Mattermark Research, Crunchbase, AngelList.

July Startup Funding Increased 71% YoY, 2015 YTD Up 76% So Far

This post is part of our Startup Funding Benchmarking Series exploring the allocation, concentration, and macro trends in the financing of high growth startups.


Startup funding continued it’s dramatic upward trend in July, with a 71% year-over-year increase in total dollars allocated. Total funding in July 2014 was $7.7 billion, compared to $13.2 billion in July 2015.

July 2015 vs 2014 YoY startup venture capital funding

Comparing the first seven months of 2014 to 2015 echoed the same trend with a year-over-year increase of 76%, from $46.4 billion in 2014 to $81.9 billion in 2015 year-to-date (January 1st to July 31st of 2014 and 2015, respectively).

July 2015 YTD vs 2014 YTD pace venture capital funding

Forecasting the Highest U.S. Fundraising Year Since 2000

Given the steady increase in funding dollars allocated in July 2015, our prediction that “2015 U.S. Startup Funding is on Pace to Reach Highest Levels Since 2000″ continues to look probable, and we will update our forecast at the end of Q3.

Looking for resources to help you research startups and venture capital? Sign up for a free trial of Mattermark Professional to access the underlying data for these graphs, as well as in-depth profiles of more than one million high growth companies.

 

© Mattermark 2015. Sources: Mattermark Research, Crunchbase, AngelList.

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