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.