4Q 2016 PitchBook NVCA Venture Monitor

4 Q 2 016
Late-stage capital no longer 88% of VC funds close on target, Expanded league tables for
easy money as activity and near $42B is raised during 4Q deals, investors, exits and
median deal size fall in 2016 2016 more
Page 8 Pages 17-18 Pages 19-21
The definitive quarterly review of the US venture capital ecosystem and trends.
Credits & Contact
PitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Market Development & Analysis
Content
NIZAR TARHUNI Senior Analyst
K YLE STANFORD Analyst
ELIZABETH ARMON Analyst
ANDY WHITE Data Analysis Manager
BRYAN HANSON Data Analyst
JENNIFER SAM Senior Graphic Designer
Contents
Contact PitchBook
pitchbook.com
RESEARCH
reports@pitchbook.com
EDITORIAL
editorial@pitchbook.com
Executive Summary 3
SALES
sales@pitchbook.com
Overview 4-5
National Venture Capital Association
Angel & Seed 6 (NVCA)
BOBBY FRANKLIN President and CEO
Early Stage 7 MARYAM HAQUE Vice President of Research
BEN VEGHTE Vice President of Communications and
Late Stage 8 Marketing
Contact NVCA
Rounds by Sector 9 nvca.org
info@nvca.org
First Financings 10
Corporate Venture Capital 11-12 COPYRIGHT 2017 by PitchBook Data, Inc. All
rights reserved. No part of this publication may be
reproduced in any form or by any meansgraphic,
Growth Equity 13 electronic, or mechanical, including photocopying,
recording, taping, and information storage and
retrieval systemswithout the express written
Exits 15-16 permission of PitchBook Data, Inc. Contents are
based on information from sources believed to be
reliable, but accuracy and completeness cannot be
guaranteed. Nothing herein should be construed
Fundraising 17-18 as any past, current or future recommendation
to buy or sell any security or an offer to sell, or
a solicitation of an offer to buy any security.
4Q 2016 League Tables 19-21 This material does not purport to contain all of
the information that a prospective investor may
wish to consider and is not to be relied upon as
Methodology 22 such or used in substitution for the exercise of
independent judgment.
The PitchBook Platform

The data in this report comes from the PitchBook Platformour data software for VC, PE and M&A.
Contact sales@pitchbook.com to request a free trial.
Executive Summary
Through the first half of 2016, venture investment activity in the US seemingly continued the frenetic pace of 2015, which was a headline
year for the industry. However, a slowdown in VC investment activity began in the third quarter that continued into the fourth quarter
when just $12.7 billion was deployed to 1,736 companies. Nonetheless, 2016 ended with a total of $69.1 billion invested into the US
venture ecosystem, representing the second highest annual totalafter 2015in the past 11 years. More than 7,751 companies raised
capital across 8,136 deals in 2016, with both measures reverting toward 2012 annual levels.
The decrease in 2016 venture investment activity was somewhat expected, given the high activity levels reached in late 2014 and 2015.
Driven by an updraft in valuations, the number of deals during this period escalated, creating indigestion in the marketplace for some. As
a result, 2016 represented less of a slowdown and more of a return to normalization. Venture investors are now circling back to tried and
true ways of deploying capital and being much more critical of their investment options. Going into 2017, the question remains whether
venture investment activity has plateaued, or if it will continue to downshift.
It was against this backdrop of a return to normalcy that the venture industry notched its best fundraising year of the past decade in 2016.
Each quarter of 2016 saw strong fundraising totals, with the $13.6 billion raised during the second quarter being the standout. In the
fourth quarter, venture investors raised $7.3 billion across 50 funds, bringing the annual total to $41.6 billion raised across 253 funds.
Despite the 10-year high for capital raised by venture funds, the total number of funds closed in 2016 declined slightly for the second
straight year. The cyclical nature of venture capital fundraising, evidenced by a number of larger venture firms coming back to market and
closing $1 billion+ funds, coincided with more capital being managed by fewer funds, leading to an increasing concentration of capital in
the industry. Seven firms raised $1 billion+ venture funds in 2016, accounting for more than 23% of the total capital raised. Given how
strong fundraising was in 2016, it will be telling to see how the fundraising environment shakes out in 2017, especially for smaller funds
and new managers who may encounter a challenging climate.
In the face of a strong year for fundraising, the exit environment remained a challenge. Corporate acquisitions continued to account for
the largest proportion of venture-backed liquidity events in 2016, and the IPO window remained narrow for venture-backed companies.
In the fourth quarter, seven venture-backed companies went public, bringing the total for the year to 39, which is half the number of IPOs
from 2015 and the lowest completed since 2009, when there were only 10 venture-backed IPOs in the wake of the financial crisis.
Looking to 2017, there is widespread hope that the IPO market will finally thaw. With around 20 venture-backed companies currently
in IPO registration, there is optimism for a strong 2017. Though the quantity and quality of companies in the pipeline remains high, the
execution of those IPOs may pose a challenge, especially for companies that have valuations that might not be easily supported in the
public markets. While there is optimism for a strong year of IPO activity, M&A activity will likely remain robust with plenty of cash on
corporate balance sheets and expectations of a Republican-controlled Washington fulfilling its pledge to reform the corporate tax code.
In spite of the slowdown in venture investment activity in the second half of 2016 and questions surrounding the IPO environment for
venture-backed companies, there remains much to be optimistic about in 2017. Venture investors will continue to invest in and unlock
new innovations that will transform our society and strengthen our economy. Many venture investors forecast 2017 being categorized as
the rise of the machine with an increased emphasis on investment in artificial intelligence, robotics, drones and machine learning. In fact,
many investors will increasingly experiment in exploratory sectors to determine what trends they can learn from, as they realize that to
make interesting, disruptive investments, they need to look beyond what they are already doing.
3
PITCHBOOK-NVC A 4Q 2016 VENTURE MONITOR
Overview
T he 2016 venture environment remained
relatively healthy. Deal count and
aggregate transaction value for the year did
While activity drops, VC invested remains strong
US VC activity by year
decline significantly from the numbers seen
in 2015, but whereas the froth in 2014 and
2015 were forged by mega-rounds and new Deal Value ($B) 10,550 10,468
unicorns, 2016 saw investment pace return # of Deals Closed 9,326
to a more manageable level, yet private val- 8,136
uations certainly didnt decrease. Deal sizes
7,987
grew or stayed flat across the board during
the year keeping deal value high on a relative 6,771
basis, however, excessive fundings were few
and far betweenthere were 40% fewer 5,411
$100 million+ rounds completed in the US 4,707
during 2016 (59) than in 2015 (98). Much 4,292 4,458
of the dialogue throughout the year focused 3,301
on investors setting higher benchmarks for
startups as the search for deals went beyond
simply growth metrics and back to core
fundamentals. Moreover, easy capital that
$29.1
$35.5
$37.2
$26.5
$31.2
$44.3
$40.6
$44.8
$68.9
$79.3
$69.1
was available during the past couple years
became much tougher to raise, resulting
in even well-funded companies looking to 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
preserve their capital runway. Source: PitchBook
Venture activity declines further in 4Q as industry continues normalization

US VC activity by quarter
$25 3,000
Deal Value ($B) # of Deals Closed
Angel/Seed Early VC 2,500

$20
Late VC
2,000
$15
1,500
$10
1,000
$5
500
$0 0
1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q 1Q 3Q
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: PitchBook. Note: Ubers financings in the first half of 2016 were collated into one super round
in 2Q 2016 according to PitchBook methodology.
4
4Q marked the sixth consecutive quarter 2012, while late-stage deal count dropped To be fair, the venture industry has several
in which we saw completed VC fundings to its lowest point since 2009. But where hurdles directly in front of it. An uncer-
decline as activity continued its steady slide the number of deals has declined, the capital tain economic environment, coupled with
back to 2012 levels. While much of that deployed into those deals, and that avail- looming change in US trade policy is sure to
decline can be traced to seed/angel deals, able to be put to work has somewhat filled have an effect on venture funding and exits,
which have fallen by 665 deals (43%) during the void, as investors shift toward a focus though to what extent is to be determined.
that time, no stage has been exempt from a on somewhat more sustainable investment Until actualization of those policies, current
fall in deal activity. Further, early-stage ac- techniques. dynamics in the venture industry will still
tivity in 4Q came in at the lowest level since result in a regression to the mean.
Median VC round size ($M) by stage Average VC round size ($M) by stage
$12 $30
Angel/Seed Early VC $28.3
Angel/Seed Early VC Late VC
$10.3 Late VC $26.9
$10 $25
$10.0
$8 $20
$6 $15
$5.3
$4.5
$10.8
$4 $10
$9.4
$2 $5
$0.8 $1.0
$1.7 $1.7
$0 $0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: PitchBook Source: PitchBook
US VC activity (#) by size US VC activity ($) by size
100% 100%
$25M+ $25M+
90% 90%
80% 80%
$10M-$25M $10M-$25M
70% 70%
60% $5M-$10M 60% $5M-$10M
50% 50%
$1M-$5M $1M-$5M
40% 40%
30% 30% $500K-$1M

$500K-$1M
20% 20%
Under
10% Under 10%
$500K
$500K
0% 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2016
5
Angel & seed stage moving 2012 levels. In contrast to the decline we stage had increased by roughly the same
saw in funding activity, median angel and percentage over 2014. The median angel
through transition seed round sizes jumped approximately deal size moved up to $600,000 last year,
Angel & seed activity in the US 11% and 50%, respectively, compared to while median valuation simultaneously
2015. In fact, more than 42% of all angel/ dipped to $5.4 million.
2 016 saw more than $6.6 billion invested seed rounds we tracked came in at between
As seed investment continues to shift
across approximately 4,115 angel/seed $1 million and $5 million, the highest
further into the venture lifecycle, the
funding rounds, reflecting noticeable year- proportion in more than 10 years.
median seed deal size reached its highest
over-year (YoY) declines of roughly 19% and For the first time in at least a decade, total point of the past decade ($1.5 million),
28%, respectively. On a quarterly basis, total angel activity declined in 2016 as just over eclipsing the previous $1 million record we
capital invested throughout 2016 certainly 2,500 financings were completed, a 25% saw in 2015. Yet moving in the opposite
remained strong relative to historical norms, YoY decline. This figure is even more notable direction of the angel market, valuations
yet total completed financings did drop to when considering that 2015 activity in the of seed deals continued to climb higher,
reaching nearly $6 million.
US angel & seed activity by quarter
Deal Value ($M) 1,537

1,476 1,437 1,433
1,372 1,276
# of Deals Closed 1,190
1,185 1,181 1,380 1,182
1,058
1,224 1,003
958 864 1,085
879 855 872
711 676
618
453
439 409 598
371
$1,050
$1,282
$1,524
$1,273
$1,350
$2,561
$1,933
$2,014
$2,366
$2,088
$1,694
$1,701
$1,785
$1,674
$1,450
$694
$666
$546
$517
$785
$790
$953
$952
$884
$963
$454
$381
$386
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
US angel & seed activity (#) by size US angel & seed activity ($) by size
100% 100%
90% $5M+ 90% $5M+
80% 80%
70% 70%
$1M-$5M $1M-$5M
60% 60%
50% 50%
40% $500K-$1M 40% $500K-$1M
30% 30%
20% 20%
Under Under
10% $500K 10% $500K
0% 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2016
6
Will 4Q be end of early- early-stage decline represents a natural
regression as investors look to maintain the
capital invested figures remained strong at
$24 billion in 2016. A heavy concentration
stage decline? bandwidth to continue supporting their of that figure ($11.3 billion) did, however,
US early-stage VC activity existing portfolio. Fervent fundraising in was in rounds of $25 million+, the highest
2016 also required considerable attention percentage weve recorded over the last
F
from managers, forcing them to explore 10 years. With capital invested certainly
ollowing a strong early-stage dealmaking
fewer transactions. Further, the last few concentrated around fewer deals this year,
environment in 2015, just shy of 2,500
years have seen a wide range of new the further maturation of new industries
rounds closed during 2016, the lowest
sectorsfrom VR to AI to IoTthat took combined with likely lower fundraising
count since 2011, with each quarter seeing
an additional amount of scrutiny and efforts could help underpin transaction
a subsequent decline in activity. Given the
understanding, lengthening the dealmaking volume after a few quarters of declining
run up in nearly every facet of the venture
process altogether. While investment activity.
industry over the last couple of years, the
activity declined across the early stage,
US early-stage VC activity by quarter
816 830
Deal Value ($B) # of Deals Closed 794 752
755
713 709 694 725 716 682
672 647 752 749 751 670 620
578 595 699
573 644 641 524
605
552
520
$3.2
$2.7
$2.8
$2.7
$3.5
$3.1
$3.6
$3.8
$3.2
$3.9
$3.0
$3.2
$3.4
$3.9
$3.3
$4.7
$4.6
$5.4
$4.9
$5.6
$5.1
$6.6
$6.5
$6.5
$6.7
$6.2
$6.0
$5.2
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
US early-stage activity (#) by size US early-stage activity ($) by size

100% 100%
$25M+ $25M+
90% 90%
80% 80%
$10M-$25M $10M-$25M
70% 70%
60% $5M-$10M 60% $5M-$10M
50% 50%
$1M-$5M $1M-$5M
40% 40%
30% $500K-$1M 30% $500K-$1M
20% 20%
Under Under
10% 10%
$500K $500K
0% 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
7
Several hurdles making to $10 million, and while 2Q stands above
all others from the last decade in terms of
before, causing some VCs to hit the pause
button before making more investments.
late-stage investors sweat capital invested, a significant amount was The hopeful rush of unicorns to IPO has yet
US late-stage VC activity generated by just two completed deals to materialize, and strategic acquirers were
for Uber and Airbnb (Ubers financings unable to pick up the slack with acquisitions
O
from the first half were combined into of their own, making the late stage an even
bservably, the late stage has seen a
one large round, according to PitchBook more difficult arena to navigate. As growth
substantial drop off in activity during
methodology). continues to require more and more capital
2016. Whereas the last couple years have
before an exit can be made, late-stage
been filled with unicorn fundings and so- The seemingly easy capital that had been
investors may be looking at much smaller
called private IPOs, 2016 was much more available to companies for several years has
ROIs than in the past, especially as the
subdued, especially toward the latter end. somewhat dried up. A sluggish exit market
validity of some valuations has come under
The median late-stage round fell slightly has kept more capital locked away than ever
scrutiny.
US late-stage VC activity by quarter
Deal Value ($B) # of Deals Closed 562

518
488
445 421 453 466 450 431
438 451 439 447
405 399 404 444 449 451
355 416 419 356
379 384 374
357 348
$10.1
$14.2
$11.3
$13.2
$11.6
$13.2
$13.1
$8.0
$6.1
$8.7
$8.7
$7.8
$5.9
$6.7
$6.2
$5.5
$6.0
$5.5
$5.8
$6.3
$6.2
$6.7
$4.4
$9.0
$6.7
$4.1
$5.6
$3.8
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook. Note: Ubers financings in the first half of 2016 were collated into one super round
in 2Q 2016 according to PitchBook methodology.
US late-stage VC activity (#) by size US late-stage VC activity ($) by size

100% 100%
$25M+ $25M+
90% 90%
80% 80%
$10M-$25M $10M-$25M
70% 70%
60% $5M-$10M 60% $5M-$10M
50% 50%
$1M-$5M $1M-$5M
40% 40%
30% $500K-$1M 30% $500K-$1M
20% 20%
Under Under
10% 10%
$500K $500K
0% 0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2016
8
Rounds by sector
No sector spared from decline VC invested in software sees uptick
US VC activity (#) by sector US VC activity ($B) by sector
12,000 Commercial $90 Commercial

Services Services
Consumer Goods $80 Consumer Goods
10,000 & Recreation & Recreation
$70
Energy Energy
8,000 $60
HC Devices & HC Devices &
Supplies Supplies
$50
HC Services & HC Services &
6,000 Systems
Systems
$40
IT Hardware IT Hardware
4,000 $30
Media Media
$20
2,000 Other Other
$10
Pharma & Biotech Pharma & Biotech
0 $0
2016
2010
2011
2012
2013
2014
2015
2016
Software
2010
2011
2012
2013
2014
2015
Software
Life sciences exhibits resilience VC dollars to life sciences declines

US VC activity (#) in life sciences US VC activity ($B) in life sciences
1,400 25% $18 30%
$16
1,200
25%
20%
$14
1,000
$12 20%
16.9%
15%
800 12.5% $10
15%
600 $8
10%
$6 10%
400
$4
5%
5%
200
$2
0 0% $0 0%
2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Life Sciences Deal Count Life Sciences as % of Total US VC (#) Life Sciences Deal Value ($B) Life Sciences as % of Total US VC ($)
Note: Life sciences is composed of pharma & biotech and healthcare devices & supplies
combined together.
9
First financings
First financing activity takes dip Follow-ons making up deal majority
US VC activity (#) in first financings US VC activity (#) by first financing vs. follow-on rounds
3,739
Deal Value ($B) 3,586
First VC Follow-on VC
3,340 3,333
# of Deals Closed
2,830
6,811
7,135
2,089
5,740
2,340
4,647
1,762
1,678 1,674
5,796
3,941
1,279
3,322
2,945
2,784
2,614
2,022
3,739
3,586
3,340
3,333
2,830
2,340
2,089
1,762
1,678
1,674
$5.8
$6.4
$5.8
$4.0
$4.7
$6.0
$6.7
$6.6
$8.1
$8.7
$6.6
1,279
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Deal count declines for sixth consecutive quarter

US first financing VC activity
Deal Value ($B) # of Deals Closed 1,053

984 929
890
945 853 874 875 864
865840
814
703 892 739
680 812 799 784 674
558 613
482 633
555 498
$1.0
$1.2
$2.0
$1.3
$1.2
$1.5
$1.6
$1.9
$1.7
$1.5
$1.5
$1.6
$1.5
$2.0
$1.8
$1.8
$2.6
$1.9
$1.9
$2.4
$2.3
$2.0
$1.6
$1.4
$2.1
$1.6
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
Note: First financings are defined as the first round of equity funding in a startup by
an institutional venture investor.
10
Corporate venture capital
S ince 2013, the number of completed
VC deals involving corporate VC (CVC)
hasnt fallen below 1,000, a barrier that had
The pace of technological advancement over
recent years has pushed corporations to find
new paths for innovation. With questions
ways is more cost effective than internal
R&D spent toward technology growth. Be-
cause the partnership between corporates
yet to be exceeded this decade. CVC has surrounding economic growth, in much the and startups is so mutually beneficial, we
continually become a popular way for corpo- same respect as corporate M&A, venture in- would be remiss to think CVC wont contin-
rations to invest in new technologies, either vesting has provided an avenue that in many ue to grow at a similar pace.
through a corporate venture arm, or simply
through diverting money directly from their
balance sheet. The percentage of all com- US venture activity with CVC participation
pleted VC deals to involve CVC has grown 1,268
each of the past four years, hitting 13.4% Deal Value ($B) 1,207
during 2016. An even more telling statistic
# of Deals Closed
regarding the growth of CVC, however, 1,004
1,069
may be the number of active corporations
during any given year, which has more than 799
doubled since 2009 to 933 in 2016, and has 675 677 704
grown in total number each year during that
537 545
time. Intel, Google and Salesforce are a few 464
of the well-known CVCs, but new entrants
into the field this year include Campbell
Soup Company, low-cost airline JetBlue and
childrens programming company Sesame
$10.8
$10.3
$12.5
$11.3
$13.5
$23.8
$31.2
$30.3
$9.1
$6.4
$7.8
Street, three companies one might not

expect to see making VC deals.
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
US VC activity with CVC participation

$14 400
$12 350
Angel/Seed Early VC
300
$10
Late VC
250
$8
200
$6
150
$4
100
$2 50
$0 0
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
11
CVC rounds continue size growth Deals sized $25M+ provide 79% of CVC
US venture activity (#) with CVC participation by deal size US venture activity ($) with CVC participation by deal size
100% 100%
$25M+ $25M+
90% 90%
80% 80%
$10M-$25M $10M-$25M
70% 70%
60% $5M-$10M 60% $5M-$10M
50% 50%
$1M-$5M $1M-$5M
40% 40%
30% 30%
$500K-$1M $500K-$1M
20% 20%
Under Under
10% 10%
$500K $500K
0% 0%
2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Overall CVC deal trends remain same Software sees highest amount of CVC
US venture activity (#) with CVC participation by sector US venture activity ($B) with CVC participation by sector
1,400 Commercial $35 Commercial

Services Services
1,200 Consumer Goods $30 Consumer Goods

& Recreation & Recreation
Energy Energy
1,000 $25
HC Devices & HC Devices &
Supplies Supplies
800 $20
HC Services & HC Services &
Systems Systems
600 IT Hardware $15 IT Hardware
400 Media $10 Media
Other Other
200 $5
Pharma & Biotech Pharma & Biotech
0 $0
2010
2011
2012
2013
2014
2015
Software
2016
2010
2011
2012
2013
2014
2015
Software
2016
Note: Above figures represent the number of venture investments with CVC
participation and the total deal size (including non-CVCs) where at least one CVC
participated. See Methodology on page 22 for more details.
12
Growth equity
Growth equity dips in 2016 $200M+ deals make up 4% of deals
US growth equity activity US growth equity activity (#) by deal size
657 100%
596 90% $200M+
80%
502 $100M-$200M
526
442 70%
439
414 465
390 60% $75M-$100M
50%
40% $50M-$75M
310
278 30%
$30M-$50M
20%
10% $15M-$30M
$10.1
$16.0
$13.9
$12.8
$18.5
$17.6
$15.5
$28.8
$36.7
$28.3
$8.4
0%
2016
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Medians drop for size and valuation Software sees lowest total in 3 years
US growth equity deal size metrics US growth equity activity (#) by sector
$250 600 Commercial Services

Median Deal Size ($M)
Consumer Goods &
Median Pre-money Valuation ($M) 500 Recreation
$200 Energy
$179
400 HC Devices & Supplies
$150
HC Services & Systems
$141 300
IT Hardware
$100
200 Media
Other
$50 100
Pharma & Biotech
$38 $35
0 Software
$0
2010
2011
2012
2013
2014
2015
2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: Growth equity is not included as a subset of overall VC data, but is rather its
own unique dataset. See the Methodology, page 22, for more details on this particular
category.
13
We do
pre-money valuations,
cap tables,
series terms,
custom search,
growth metrics.
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Exits
Exit value nearly equals 2015
US venture-backed exit activity
D espite deal flow retracting a significant
amount over the past year, investments
outpaced exits by an 11.2x multiple, the
Exit Value ($B) highest weve seen in a decade. This metric
1040
clearly exemplifies the sluggish VC-backed
# of Exits Closed 961 exit market weve seen play out over the
885 past year, as that figure came in higher
859
than both 2014 and 2015, two years during
733 which we saw much heavier deal flow and
693 would expect to have a higher investment to
726
602 exit ratio. Further, with just 726 VC-backed
exits completed during the year, 2016 saw
510 the lowest exit count since 2010, leaving
465 482
a significant amount of VC value yet to be
realized.
Of the $46.8 billion exited in 2016, roughly

59% ($27.6 billion) was exited via $500
$24
$41
$18
$16
$30
$37
$54
$36
$82
$50
$47
million+ transactions, the largest percentage

of capital produced from the size bucket in
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 over a decade. Median exit sizes scaled 30%
Source: PitchBook
higher YoY to a new recent high of $84.5
Exit activity continues dramatic slide

US venture-backed exit activity
256
Exit Value ($B) # of Exits Closed 274
236 240
220
207 231 194
200 201
181
150 162
142
$11.3
$23.9
$11.1
$12.1
$10.7
$13.3
$13.9
$11.7
$18.1
$38.0
$10.3
$15.6
$16.0
$15.3
$15.4
$8.4
$7.9
$9.2
$8.8
$7.9
$8.9
$6.8
$8.1
$8.4
$9.3
$6.8
$4.8
$4.2
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
15
million, reflecting a combination of both serve for purposes of both technological need to be patient before embarking on
the bump in valuations that have continued innovation and operational finetuning, expensive IPO processes. Further, weve
to creep higher, as well as an increasing helping streamline various back-end seen major players in the PE world such
number of aging companies that have been processes and harness new/innovative as Vista Equity Partners and KKR raise
able to grow and complete exits further business models. Walmart and Unilever rather large, multibillion-dollar funds to
along in their lifecycles. can serve as examples with their massive focus on tech investments. While some
respective purchases of Jet and Dollar of these transactions could come in the
Corporate acquisitions have continued to
Shave Club. form of growth rounds, or take-privates,
account for the largest portion of VC-
aging venture companies should serve as
backed exits, accounting for 82% overall, Moving forward, strategics will likely
enticing opportunities as PE can help them
followed by PE buyouts at 13%. Strategics continue to serve as the primary exit
become increasingly efficient operators, and
outside of tech have been able to turn to route, and depending on how the public
ultimately sponsor a future exit.
the venture market to locate companies to markets continue to perform, investors will
US venture-backed exits (#) by type US venture-backed exits ($) by type

1,200 $90
Acquisition IPO $80 Acquisition IPO

1,000 Buyout Buyout
$70
800 $60
$50
600
$40
400 $30
$20
200
$10
0 $0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: M&A value is based on disclosed/reported figures.
Median US venture-backed exit size ($M) by type US venture-backed exits (#) by sector
$100 1,200
Commercial
$90.0 Services
1,000 Consumer Goods
$80 & Recreation
$74.8 Energy
800
$70.5 HC Devices &
$60 Supplies
HC Services &
600
Systems
$50.0 IT Hardware
$40
400
Media
Other
$20 200
Pharma & Biotech
Acquisition/Buyout IPO
0 Software
$0
2016
2010
2011
2012
2013
2014
2015
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
16
Fundraising
2016 a banner year for VC fundraising
US VC fundraising by year
2 016 saw the highest amount of venture
capital raised for funds in at least a
decade, and by a decent margin. Nearly $42
billion was raised across 253 vehicles during
Capital Raised ($B) # of Funds Closed 268
253 the year, well above the $35 billion raised
over 255 funds in 2015. The increase in
255
deal sizes over the past several years could
204 have been a major driver for the record haul.
198
193 190 Oversized VC funds will allow investors to
183
continue investing at these elevated sums
141
when the right opportunity presents itself,
153
while also allowing for follow-on invest-
ments where needed. In many cases when
122 comparing quarterly or yearly numbers, a
few outlying amounts could easily skew
the ratio, but the growth of capital raised
in 2016 came from a well-rounded field of
funds, albeit with a concentration toward
the top. Seven vehicles closed on at least
$36
$35
$36
$12
$20
$23
$24
$21
$35
$35
$42
$1 billion in commitments, but the median

fund size grew to $75 million in 2016, more
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
than $35 million higher than in 2015 and the
Source: PitchBook
highest median since 2008.
Another contributing factor to the amount

Fundraising tailed off toward years end raised this year may simply be timing. Both
US VC fundraising by quarter
75
Capital Raised ($B) # of Funds Closed 72 70 72 71 68
67
62 60
57 57 59
50 51 52
49 48
44 50 50
42 47
36
32
29
33 33
28
$10.5
$11.7
$11.7
$10.5
$13.6
$10.3
$8.4
$3.4
$4.0
$3.7
$7.0
$6.2
$8.1
$8.6
$4.8
$8.0
$3.0
$6.5
$4.3
$4.3
$5.6
$9.0
$7.2
$8.7
$7.9
$3.9
$7.3
$2.0
2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
17
US VC funds (#) hitting target the median and average time to close for VC
funds in 2016 came in at roughly 18 months,
100%
which would put the inception of even the
most recently closed funds back into the VC
80% boom-time of mid-2015. From the begin-
ning of the fundraising process, GPs would
60% have been able to provide LPs with either
solid cash returns (2014 and 2015 saw a
combined $132 billion in exit value), or have
40% the data to show that the previous funds are
doing well and sitting on large paper gains
20% (the median VC IRR for 2013 vintage funds is
more than 16%). The venture industrys ex-
ploits of the past few years werent cornered
0%
by established GPs, either: First-time funds
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
raised more than $2.2 billion in commit-
Hit Target Missed Target
ments during 2016, the largest amount by
Source: PitchBook
first-time managers since 2008.
US VC funds time to close (months) The current fundraising cycle could for the
most part be over, given that so much has
30
Median Average
been committed and much less has made
its way back to LPs through exits in 2016.
25
With that said, LPs could look to adjust their
manager selection processes and consolidate
20 18.5
the number of VCs they spread their money
16.1
18.6 to. Thus, while fewer managers might be on
15 the fundraising trail in 2017, the $112 billion
13.9 that has been committed to US VC funds
10 over the past three years should be able to
sustain the current dealmaking environment
5 and provide ample capital opportunities for
worthy companies.
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: PitchBook
US VC fundraising (#) by size US first-time VC funds by year

100% 46
$1B+
Capital Raised ($B)
90%
# of Funds Closed
80% $500M-$1B
36
34
70%
$250M-
60% $500M 32 32
26
50% 23 22
$100M- 25 21
40% $250M
30% $50M-$100M 18
20%
Under $50M
10%
$3.0
$2.9
$3.0
$1.1
$0.9
$1.9
$1.5
$1.4
$1.8
$1.6
$2.2
0%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
18
4Q 2016 League Tables
Most active investors Most active investors Most active investors
Angel/seed Early stage Late stage
Investor Deals Investor Deals Investor Deals
500 Startups 10 GV 10 Andreessen Horowitz 6
Keiretsu Forum 10 Union Square Ventures 9 Bessemer Venture Partners 5
Founder Collective 6 Index Ventures 8 Intel Capital 5
Index Ventures 6 Andreessen Horowitz 7 Khosla Ventures 5
First Round Capital 5 ARCH Venture Partners 7 Lightspeed Venture Partners 5
Innovation Works 5 Kleiner Perkins Caufield & Byers 7 Menlo Ventures 5
M25 Group 5 SV Angel 7 Canaan Partners 4
SV Angel 5 True Ventures 7 General Catalyst Partners 4
Y Combinator 5 Canaan Partners 6 InterWest Partners 4
Alliance of Angels 4 Lightspeed Venture Partners 6 New Enterprise Associates 4
Bessemer Venture Partners 4 Third Wave Digital 6 Sequoia Capital 4
BoxGroup 4 Keiretsu Capital 6 SharesPost 4
Data Collective 4 Accel Partners 5 Spark Capital 4
Eniac Ventures 4 Bloomberg Beta 5 Source: PitchBook
General Catalyst Partners 4 Chicago Ventures 5
Greycroft Partners 4 General Catalyst Partners 5
Initialized Capital 4 Hyde Park Venture Partners 5
Presence Capital 4 Intel Capital 5
Rough Draft Ventures 4 New Enterprise Associates 5
Techstars 4 Sequoia Capital 5
True Ventures 4 Source: PitchBook
Source: PitchBook
19
Top 10 largest US venture financings in 4Q 2016
Company Deal size ($M) Series/Stage Date HQ City State Industry
Opendoor $210 Series D 11/28/2016 San Francisco CA Software
Payoneer $180 Series E 10/3/2016 New York NY Financial Software
Stripe $150 Series D 11/25/2016 San Francisco CA Software
Postmates $141 Series E 10/24/2016 San Francisco CA Software
OfferUp $130 Series C1 11/16/2016 Bellevue WA Software
Zymergen $130 Series B 10/11/2016 Emeryville CA Business Products
Memebox $125.95 Series C 12/15/2016 San Francisco CA Retail
Unity Biotechnology $116 Series B 10/27/2016 San Francisco CA Pharma & Biotech
JetSmarter $105 Series C 12/12/2016 Fort Lauderdale FL Software
Zibby $103 Early Stage 12/15/2016 New York NY Software

Source: PitchBook
Top 10 largest US venture funds closed in 4Q 2016
Investor Fund Fund size ($M) Close date State
Greylock Partners Greylock XIV $1,105 10/11/2016 CA
Sofinnova Ventures Sofinnova Venture Partners X $650 10/17/2016 CA
Third Rock Ventures Third Rock Ventures IV $616 10/31/2016 MA
Spark Capital Spark Capital Growth Fund II $600 11/15/2016 MA
Spark Capital Spark Capital V $400 11/15/2016 MA
Tola Capital Tola Capital Partners I $295 11/14/2016 WA
Flagship Ventures Flagship Ventures Opportunities Fund I $285 12/15/2016 IL
Ascension Ventures CHV IV $255 11/23/2016 MO
Wing Venture Capital Wing Two $250 12/7/2016 CA
Data Collective Data Collective IV $212 12/29/2016 CA

Source: PitchBook
Top five largest IPOs of US-based companies in 4Q 2016
Company Total raised ($M) Post-valuation ($M) Date HQ City State Industry
Coupa Software $133.2 $732.8 10/6/2016 San Mateo CA Software
AquaVenture Holdings $117 $340.4 10/6/2016 Tampa FL Utilities
Quantenna Communications $107 $417.3 10/28/2016 Fremont CA Semiconductors
iRhythm Technologies $107 $252.1 10/20/2016 San Francisco CA Healthcare Devices & Supplies
Ra Pharmaceuticals $91.6 $187.7 10/26/2016 Cambridge MA Pharma & Biotech

Source: PitchBook
Top five largest mergers and acquisitions of US-based companies in 4Q 2016
Company Deal size ($M) Date HQ City State Industry
Chase Pharmaceuticals $1,000 11/22/2016 Washington DC Pharma & Biotech
Krux Digital $800 12/15/2016 San Francisco CA Software
Seventh Generation $700 10/1/2016 Burlington VT Consumer Products
Selexys $665 11/21/2016 Oklahoma City OK Pharma & Biotech
Dyn $650 11/22/2016 Manchester NH Software

Source: PitchBook
20
States & territories by VC activity States & territories by VC activity Top Congressional districts by VC activity in
in 4Q 2016 in 4Q 2016, ctd. 4Q 2016
Congressional Deal
State Deal count State Deal count State
District count
California 587 Arkansas 5 California 12 140
New York 192 North Dakota 4 New York 12 80
Massachusetts 131 Idaho 4 California 18 71
Texas 106 Vermont 3 California 14 58
Washington 81 Iowa 3 New York 10 48
Colorado 58 Oklahoma 3 Washington 7 43
Illinois 47 Nebraska 3 Massachusetts 7 41
North Carolina 40 Kansas 2 California 17 36
Florida 40 Puerto Rico 2 California 52 31
Ohio 39 New Mexico 2 Massachusetts 5 28
Pennsylvania 35 Maine 2 California 33 26
Utah 28 Mississippi 2 Illinois 7 25
Georgia 27 Hawaii 2 Texas 21 24
Maryland 26 South Dakota 2 North Carolina 4 22
Arizona 26 West Virginia 1 California 13 21
Virginia 26 Wyoming 1 Colorado 2 21
Tennessee 21 Louisiana 1 Massachusetts 8 17

Source: PitchBook
New Jersey 20 California 49 14
Indiana 19 Washington 1 12
Oregon 18 Top 10 Metropolitan Statistical Area (MSA) California 34 11
Minnesota 17
activity in 4Q 2016
Colorado 1 11
Connecticut 14 MSA Deal Count California 37 10
Wisconsin 14 California 45 10
San Francisco-Oakland-Fremont, CA 303
Michigan 14 New York-Northern New Jersey- Pennsylvania 14 10
199
Long Island, NY-NJ
Nevada 11 Tennessee 5 10
Boston-Cambridge-Quincy, MA 132
Washington DC 11 Utah 3 10
Los Angeles-Long Beach-Santa Ana,
105
Missouri 10 CA
District of Columbia N/A 10
San Jose-Sunnyvale-Santa Clara, CA 97
Rhode Island 7 Source: PitchBook
Seattle-Tacoma-Bellevue, WA 77
Alabama 7
San Diego-Carlsbad-San Marcos, CA 46
South Carolina 7
Austin-Round Rock, TX 46
Kentucky 6
Chicago-Naperville-Joliet, IL-IN-WI 45
New Hampshire 6
Washington-Arlington-Alexandria,
Montana 6 35
DC-VA-MD
Delaware 5 Source: PitchBook
21
Methodology
Fundraising
We define venture capital funds as pools of capital raised for the purpose of investing in the equity of startup companies. In addition to
funds raised by traditional venture capital firms, PitchBook also includes funds raised by any institution with the primary intent stated
above. Funds identifying as growth-stage vehicles are classified as PE funds and are not included in this report. A funds location is
determined by the country in which the fund is domiciled, if that information is not explicitly known, the HQ country of the funds general
partner is used. Only funds based in the United States that have held their final close are included in the fundraising numbers. The entirety
of a funds committed capital is attributed to the year of the final close of the fund. Interim close amounts are not recorded in the year of the
interim close.
Deals
We include equity investments into startup companies from an outside source. Investment does not necessarily have to be taken from an
institutional investor. This can include investment from individual angel investors, angel groups, seed funds, venture capital firms, corporate
venture firms, and corporate investors. Investments received as part of an accelerator program are not included, however, if the accelerator
continues to invest in follow-on rounds, those further financings are included. All financings are of companies headquartered in the US.
Angel/seed: We define financings as angel rounds if there are no PE or VC firms involved in the company to date and we cannot determine
if any PE or VC firms are participating. In addition, if there is a press release that states the round is an angel round, it is classified as such.
Finally, if a news story or press release only mentions individuals making investments in a financing, it is also classified as angel. As for
seed, when the investors and/or press release state that a round is a seed financing, or it is for less than $500,000 and is the first round as
reported by a government filing, it is classified as such. If angels are the only investors, then a round is only marked as seed if it is explicitly
stated.
Early-stage: Rounds are generally classified as Series A or B (which we typically aggregate together as early stage) either by the series of
stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing
history, company status, participating investors, and more.
Late-stage: Rounds are generally classified as Series C or D or later (which we typically aggregate together as late stage) either by the series
of stock issued in the financing or, if that information is unavailable, by a series of factors including: the age of the company, prior financing
history, company status, participating investors, and more.
Growth equity: Rounds must include at least one investor tagged as growth/expansion, while deal size must either be $15 million or more
(although rounds of undisclosed size that meet all other criteria are included). In addition, the deal must be classified as growth/expansion or
later-stage VC in the PitchBook Platform. If the financing is tagged as late-stage VC it is included regardless of industry. Also, if a company is
tagged with any PitchBook vertical, excepting manufacturing and infrastructure, it is kept. Otherwise, the following industries are excluded
from growth equity financing calculations: buildings and property, thrifts and mortgage finance, real estate investment trusts, and oil & gas
equipment, utilities, exploration, production and refining. Lastly, the company in question must not have had an M&A event, buyout, or IPO
completed prior to the round in question.
Corporate venture capital: Financings classified as corporate venture capital include rounds that saw both firms investing via established CVC
arms or corporations making equity investments off balance sheets or whatever other non-CVC method actually employed.
Exits
We include the first majority liquidity event for holders of equity securities of venture-backed companies. This includes events where there
is a public market for the shares (IPO) or the acquisition of majority of the equity by another entity (corporate or financial acquisition). This
does not include secondary sales, further sales after the initial liquidity event, or bankruptcies. M&A value is based on reported or disclosed
figures, with no estimation used to assess the value of transactions for which the actual deal size is unknown.
22
The 411 on the PitchBook
and National Venture Capital
Association (NVCA) partnership
Why we teamed up Meet the PitchBook-NVCA Venture Monitor

NVCA is recognized as the go-to organization for A brand-new, quarterly report that
venture capital advocacy, and the statistics we details venture capital activity
release are the industry standard. PitchBook is and delivers insights to inform your
the leading data software provider for venture investment strategy. PitchBooks
capital professionals, serving more than 1,800 data will also bolster our
clients across the private market. Our partnership year-in-review publication.
with PitchBook empowers us to unlock more
insights on the venture ecosystem and better
advocate for an ever-evolving industry.
T H E P E R K S O F PA R T N E R S H I P
The PitchBook Platform More data. Less dough.

As an NVCA member, your free access to the Our members get 10% off a new subscription
PitchBook Platform includes five advanced to the PitchBook Platform (up to a
searches and five profile views per month. $10,000 value) or one free, additional seat.
Fundraise faster with targeted searches for If your firm was a PitchBook client prior
limited partners who will likely be interested to September 14, 2016, youre eligible for
in your fund. one of these discounts the next time you
renew your contract.
Conduct better due diligence by diving deep
into a companys round-by-round financing
history, executive team and market traction. Help us help you
Price deals with confidence using pre- and We will email quarterly surveys to each
post-money valuations, public and private member firm, which will give you the
comps, cap tables and series terms. opportunity to report your activity to
Find promising investors quickly by zeroing PitchBook. The data you provide will
in on other firms or strategic acquirers not only power PitchBook-NVCA reports,

whose investment preferences match your but also ensure your firm is represented
portfolio company. accurately in the PitchBook Platform. If
youd like to send your quarterly activity
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Ready to get started with the PitchBook Platform? Go to pitchbook.com/nvca research@pitchbook.com.
PitchBook Data, Inc. | 206.623.1986 | pitchbook.com/nvca National Venture Capital Association | 202.864.5920 | nvca.org

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4 Q 2 016

Late Stage 8 Marketing

The PitchBook Platform

Venture activity declines further in 4Q as industry continues normalization

Angel/Seed Early VC 2,500

Source: PitchBook Source: PitchBook

US VC activity (#) by size US VC activity ($) by size

60% $5M-$10M 60% $5M-$10M

30% 30% $500K-$1M

Source: PitchBook Source: PitchBook

US angel & seed activity by quarter

Deal Value ($M) 1,537

90% $5M+ 90% $5M+

40% $500K-$1M 40% $500K-$1M

Source: PitchBook Source: PitchBook

US early-stage VC activity by quarter

US early-stage activity (#) by size US early-stage activity ($) by size

60% $5M-$10M 60% $5M-$10M

30% $500K-$1M 30% $500K-$1M

Source: PitchBook Source: PitchBook

US late-stage VC activity by quarter

Deal Value ($B) # of Deals Closed 562

US late-stage VC activity (#) by size US late-stage VC activity ($) by size

60% $5M-$10M 60% $5M-$10M

30% $500K-$1M 30% $500K-$1M

Source: PitchBook Source: PitchBook

12,000 Commercial $90 Commercial

Source: PitchBook Source: PitchBook

Life sciences exhibits resilience VC dollars to life sciences declines

Source: PitchBook Source: PitchBook

Deal count declines for sixth consecutive quarter

Deal Value ($B) # of Deals Closed 1,053

Street, three companies one might not

US VC activity with CVC participation

60% $5M-$10M 60% $5M-$10M

Source: PitchBook Source: PitchBook

1,400 Commercial $35 Commercial

1,200 Consumer Goods $30 Consumer Goods

400 Media $10 Media

Source: PitchBook Source: PitchBook

$250 600 Commercial Services

Source: PitchBook Source: PitchBook

See how the PitchBook Platform can

Of the $46.8 billion exited in 2016, roughly

million+ transactions, the largest percentage

Exit activity continues dramatic slide

US venture-backed exits (#) by type US venture-backed exits ($) by type

Acquisition IPO $80 Acquisition IPO

$1 billion in commitments, but the median

Another contributing factor to the amount

US VC fundraising (#) by size US first-time VC funds by year

Investor Deals Investor Deals Investor Deals

500 Startups 10 GV 10 Andreessen Horowitz 6

Keiretsu Forum 10 Union Square Ventures 9 Bessemer Venture Partners 5

Founder Collective 6 Index Ventures 8 Intel Capital 5

Index Ventures 6 Andreessen Horowitz 7 Khosla Ventures 5

First Round Capital 5 ARCH Venture Partners 7 Lightspeed Venture Partners 5

Innovation Works 5 Kleiner Perkins Caufield & Byers 7 Menlo Ventures 5

M25 Group 5 SV Angel 7 Canaan Partners 4

SV Angel 5 True Ventures 7 General Catalyst Partners 4

Y Combinator 5 Canaan Partners 6 InterWest Partners 4

Alliance of Angels 4 Lightspeed Venture Partners 6 New Enterprise Associates 4

Bessemer Venture Partners 4 Third Wave Digital 6 Sequoia Capital 4

BoxGroup 4 Keiretsu Capital 6 SharesPost 4