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Venture Financing Report – Q1 2018 – Valuations Continue to Rise in the New Year

In the first quarter of 2018, both deal volumes and aggregate dollars raised remained robust, though slowing from the torrid final quarters of 2017. In Q1 2018, Cooley handled 205 disclosable deals representing more than $4.9 billion of invested capital.

During Q1, median pre-money valuations continued to rise to record levels. We witnessed an increase in median pre-money valuations across all deal stages, with the exception of Series C transactions. Valuations for Series A deals hit levels not seen in 14 years of reporting. Up rounds remained at high levels, as 83% of transactions were up rounds during the quarter. We also saw a decrease in transactions structured in tranches across all industries.

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Commentary from Matthew Howard of Norwest Venture Partners

On his market outlook: Overall, I am extremely bullish as technology continues to be a major contributor to the US economy, and I do think disruptive technology and business models will continue to change many aspects of healthcare, consumer and enterprise opportunities.

On valuations: With so much capital deployed over the past several years, valuations seem to have cooled for some companies needing more time to get aligned with the “rule of 40” metrics.

On exit routes: I expect, based on 2016 and 2017 data, that more often than not, companies will go the M&A route.

On M&A: Q1 2018 saw a huge increase in the tech M&A market from non-tech buyers. Transactions led by non-tech buyers nearly tripled from Q4 2017.

Read Cooley’s full interview with Matthew Howard on Cooley GO.

Related Contacts
Matthew Bartus  Partner San Francisco, Singapore, Palo Alto
Sonya Erickson  Partner Seattle
Nick Hobson  Partner Los Angeles
Jason Kent  Partner New York
Stephane Levy  Partner New York
James Lu  Partner Shanghai, San Diego
Andrew Lustig  Partner Reston
Pat Mitchell  Partner Boston, New York
Danielle Naftulin  Partner Palo Alto
Brooke Nussbaum  Partner Washington, DC
Rachel Proffitt  Partner San Francisco
Joshua Rottner  Partner Boston
Justin Stock  Managing Partner – London London
Related Practices & Industries

Emerging Companies  Venture Capital