Venture Financing Report – Q3 2017 – Valuations Continue a Remarkable Climb

In the third quarter of 2017, there were slightly lower deal volumes but higher aggregate dollars raised as compared to the prior quarter. Compared to Q3 2016, we saw a 21% increase in deal volume and a 151% increase in aggregate dollars raised. In Q3 2017, Cooley handled 210 disclosable deals representing more than $5.3 billion of invested capital. When aggregated across industries, our data pointed to a continued increase in median pre-money valuations across all deal stages, with the exception of seed stage deals. A small number of very large, later stage deals in Q3 drove the average median pre-money valuation for Series D+ transactions to $750 million, a level not seen in over eight years. Cooley handled four disclosable deals in the quarter with median pre-money valuations greater than $1 billion.

Deal terms continued to be company-friendly. The percentage of deals with no participating liquidation preferences increased from 83% in Q2 to 86% of transactions in Q3. Additionally, we witnessed a decrease in the percentage of deals structured in tranches, with just 8% of transactions containing this structure.

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Commentary from Lauren Loktev

Lauren Loktev, from Collaborative Fund, discusses her view on the current state of VC investing.

On dealflow: This year, Collaborative has seen a continuation of healthy capital flow, a surplus of competition among VCs for what are perceived to be the best deals and, generally, an uptick in valuations across rounds.

On social impact: We truly believe that paying attention to social impact and having strong values and a message around moving the world forward is a competitive edge – both for businesses as well as for investors.

On Collaborative’s year: I’d say a typical case for us is making an investment every six weeks or so, and that has been consistent in 2017. I anticipate this trend to continue in 2018.

On shifting consumer behavior: Consumers are increasingly demanding products with great stories and ones that fundamentally align with their values.

Read Cooley’s full interview with Lauren Loktev on Cooley GO. 

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