Press Release 4th April 2017 ________________________________________________________________________________________________________ Venture Capital Deal Activity Recovers in Q1 2017 Global deal flow rises from decline seen in previous two quarters, but remains below levels seen in Q1 2016 Global venture capital-backed deal activity increased in Q1 2017, as 2,420 deals were recorded, worth a combined $31bn. Preqin expects these figures rise by up to 5% as more information becomes available, putting the quarter comfortably ahead of the level of activity seen in Q3-4 2016. However, it does not match the $40bn in deal activity recorded in the opening quarter of last year, and the number of deals remained at the lower levels seen in the previous two quarters. Similarly, venture capital-backed exit activity in Q1 remained broadly on par with the previous two quarters. Activity did increase, as 277 exits were made for a combined $17bn, but remains below the level seen in Q1 2016. Multi-billion dollar exits from AppDynamics Inc., Snap Inc., and ZELTIQ Aesthetics Inc. led activity through the quarter. Key Q1 Venture Capital-Backed Deals and Exits Facts: North America saw 946 deals in Q1 worth a combined $15bn, 39% of global deal flow and 47% of the total value. Greater China saw 456 deals through the quarter, which were worth a total of $9bn. Angel/Seed stage investments comprised 30% of venture capital deals in Q1, down from 35% across 2016. Series D and later financings represent 4% of deal flow, while growth capital accounts for a further 3%. Internet-related deals once again accounted for the largest part of deal value (25%), but software (16%), telecoms (17%) and healthcare (19%) deals also represent significant proportions. The largest venture capital-backed deal announced in Q1 2017 was the financing of Zhejiang Koubei Network Technology Co. Ltd., an online media company, for $1.1bn in January. There were 277 exits from venture capital-backed portfolio companies in the quarter, worth a total of $17bn. Of this, 166 exits were in North America, accounting for $14bn Exit activity included 26 IPOs for a combined $5.1bn. This is largely due to the $3.4bn partial flotation of Snap Inc. in March. By contrast, 221 trade sale exits were made in Q1 for a total of $11bn. The largest exit of the quarter was a trade sale: Cisco Systems Inc. bought AppDynamics Inc. for $3.7bn in January. Felice Egidio, Head of Venture Capital Products: “The venture capital industry has been seeing a period of consistent, strong deal activity over recent months. The first quarter of 2017 is another robust quarter in this vein, but some will wonder if the industry can look to match the heights seen in 2015 and 2016. Activity slowed in the second half of last year and has yet to fully regain momentum, perhaps due to the ever-increasing competition presented by retail and strategic investors. However, the exit environment will be a source of optimism for both fund managers and investors. In particular, many will be hoping that the Snap Inc. IPO prompts others to follow suit. Many large venture capital funds and their investors have significant amounts of capital tied up in large privately-held companies, and will be hoping that in the current favourable environment their on-paper gains might be converted to currency. While not yet a pressing issue, many fund managers in particular will be wary of remaining heavily invested in such companies as their fund’s lifespan comes to a close.” Please view the full Q1 2017 Venture Capital Deals and Exits factsheet below: ______________________________________________________________________________________________ Preqin is the leading source of information for the alternative assets industry, providing insight and analysis gathered by its global teams of dedicated researchers. 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New York London Singapore San Francisco Hong Kong Manila +1 212 350 0100 +44 20 3207 0200 +65 6305 2200 +1 415 316 0580 +852 3958 2819 www.preqin.com / [email protected] DOWNLOAD THE DATA PACK Q1 2017 VENTURE CAPITAL DEALS AND EXITS 4 APRIL 2017 Fig. 1: Global Quarterly Venture Capital Deals*, Fig. 3: Number of Venture Capital Deals in Q1 2017 by Q1 2012 - Q1 2017 Fig. 2: Venture Capital Deals* in Q1 2017 by Region Investment Stage 3,500 50 100% 3% 9% 1% Angel/Seed 45 8% 3,000 90% 2% 40 ($bn) Value Deal Aggregate 9% Other 8% Series A/Round 1 80% 1% 2,500 5% 35 29% 1% Series B/Round 2 70% 19% Israel 30 3% 30% 2,000 Series C/Round 3 60% 4% 25 India 1,500 11% Series D/Round 4 and Later 20 50% 22% 6% No. of Deals No. Greater China 1,000 15 40% Growth Capital/Expansion 10 500 Total of Proportion 30% Europe PIPE 5 47% 14% 20% 39% 0 0 North America Grant Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 10% 28% Venture Debt 2012 2013 2014 2015 2016 2017 0% Add-on & Other No. of Deals Aggregate Deal Value ($bn) No. of Deals Aggregate Deal Value Source: Preqin Private Equity Online Source: Preqin Private Equity Online Source: Preqin Private Equity Online Fig. 5: Average Value of Venture Capital Deals by Investment Fig. 4: Venture Capital Deals* in Q1 2017 by Industry Stage, 2015 - Q1 2017 Fig. 6: Number of US Venture Capital Deals* in Q1 2017 by State 30% 28% 100 94 89 25% 90 86 25% 23% 80 70 20% 19% 63 2015 California 17% 60 16% 31% 50 15% 13% 42 41 2016 New York 37 39 12% 40 33 40% 10% 8% 30 23 23 23 23 24 Q1 2017 Massachusetts 7% 19 Proportion of Total of Proportion 5% 5% 5% 20 5% 4% 111210 3% 3% ($mn) Deal Size Average 10 Texas 2% 2% 2%2% 1 2 2 0 0% 4% Washington 4% Other Round 2 Round Round 3 Round Series B/ Round 1 Round Series C/ Series A/ Other Internet Other IT Other Services Business Clean Related Telecoms 9% Angel/Seed Industrials Healthcare Software & 14% Expansion Consumer Technology 4 and Later 4 and Venture Debt Discretionary Series D/Round Growth Capital/ No. of Deals Aggregate Deal Value Investment Stage Source: Preqin Private Equity Online Source: Preqin Private Equity Online Source: Preqin Private Equity Online *Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases. 1 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD THE DATA PACK Q1 2017 VENTURE CAPITAL DEALS AND EXITS 4 APRIL 2017 Fig. 7: 10 Largest Venture Capital Deals* Announced Globally in Q1 2017 Portfolio Company Deal Date Investment Stage Deal Size (mn) Investor(s) Industry Location Zhejiang Koubei Network Jan-17 Unspecifi ed Round 1,100 USD CDH Investments, Primavera Capital, Silver Lake, YF Capital Telecoms China Technology Co., Ltd. Flipkart Internet Private Limited Mar-17 Unspecifi ed Round 1,000 USD eBay Inc., Microsoft, Tencent Internet India GRAIL, Inc. Mar-17 Series B/Round 2 900 USD ARCH Venture Partners, Bristol-Myers Squibb, Johnson & Johnson Innovation Biotechnology US Verily Life Sciences LLC Jan-17 Unspecifi ed Round 800 USD Temasek Holdings Life Sciences US Ucar Mar-17 Series D/Round 4 4,600 CNY China UnionPay, Shanghai Pudong Development Bank Telecoms China Snap Inc. Mar-17 PIPE 500 USD NBC Universal Telecoms US Social Finance Feb-17 Series F/Round 6 500 USD GPI Capital, Silver Lake, Softbank Financial Services US Uxin Internet (Beijing) Information China Renaissance Partners, China Vision Capital, Focus Media, Hillhouse Capital Jan-17 Series D/Round 4 500 USD Internet China Technology Co., Ltd Management, Jeneration Capital, KKR, Tiger Global Management, TPG, Warburg Pincus Atomico, CITIC Private Equity Funds Management, Coatue Management, Didi Chuxing, Ofo Bicycle Mar-17 Series D/Round 4 450 USD Telecoms China DST Global, Macrolink Group, Matrix Partners China Airbnb Mar-17 Series F/Round 6 448 USD CapitalG, China Investment Corporation, Technology Crossover Ventures Internet US *Figures exclude add-ons, grants, mergers, venture debt and secondary stock purchases. Source: Preqin Private Equity Online Fig. 8: Global Quarterly Venture Capital-Backed Exits, Q1 2012 - Q1 2017 Fig. 9: Venture Capital-Backed Exits in Q1 2017 by Region Fig. 10: Venture Capital-Backed Exits in Q1 2017 by Type 180 450 50 166 100% 4% 400 45 160 90% 9% Aggregate Exit Value ($bn) Value Exit Aggregate 29% 40 140 6% 350 80% 35 120 300 70% Write-off 30 5% 250 100 25 60% IPO 200 80 20 50% No. of Exits No. 150 60 49 Sale to GP 15 40% 40 80% 100 10 19 21 Total of Proportion 66% 20 14.0 15 30% Trade Sale 50 5 7 1.4 0.6 0.5 0.1 0.7 20% 0 0 0 North Europe Greater India Israel Other Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 10% America China 2012 2013 2014 2015 2016 2017 0% No. of Exits Aggregate Exit Value ($bn) No. of Exits Aggregate Exit Value No. of Exits Aggregate Exit Value Source: Preqin Private Equity Online Source: Preqin Private Equity Online Source: Preqin Private Equity Online 2 © Preqin Ltd. 2017 / www.preqin.com DOWNLOAD THE DATA PACK Q1 2017 VENTURE CAPITAL DEALS AND EXITS 4 APRIL 2017 Fig. 11: 10 Largest Venture Capital-Backed Exits Announced Globally in Q1 2017 Date of First Total Known Exit Exit Value Portfolio Company Investor(s) Exit Type Acquiror (Exit) Industry Location Investment Funding ($mn) Date (mn) Adage Capital Management, Altimeter Capital, Battery Ventures, ClearBridge, Cross Creek Advisors, General Atlantic, Goldman Sachs, Greylock Partners, Industry Ventures, Institutional Venture Partners, AppDynamics Inc.