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2017 Top Year for Venture Capital Since Dot Com Boom

2017 Top Year for Venture Capital Since Dot Com Boom

According to a newly released study produced jointly by financial data company PitchBook and the National Venture Capital Association (NVCA), the U.S. venture capital industry in 2017 finished the strongest it has in decades, with a total of $84 billion invested in more than 8,000 companies — the largest annual amount of capital invested in the entrepreneurial ecosystem since the first Internet boom in the late ‘90s.

Unicorns were major drivers of that momentum, attracting $19.2 billion of the total raised, or 23 percent of the VC capital. Deals of $50 million or larger monopolized VC activity, representing nearly half of total VC deal value, while deals of $1 million or smaller were less than 30 percent. The year also saw a record amount of new venture funds, with 209 new funds closing $32 billion, including the largest VC fund ever raised: New Enterprise Associates’ $3.3 billion vehicle, raised in June of last year.

According to John Gabbert, CEO and founder of PitchBook, the industry sectors that attracted the highest proportion of VC investment included VR/AR, IoT, AI and fintech.  

“As we close the books on another banner year, 2017 will be remembered as a year of changing market dynamics for the industry,” said Bobby Franklin, president and CEO of NVCA.

While VC investments continued to rise in 2017, the PitchBook-NVCA report revealed that the number of VC-backed exits declined for the third consecutive year, reaching the lowest total — 769 exits — since 2011. The decline reflected large companies’ growing propensity for raising additional private funding rather than seeking exits via IPOs or strategic acquirers. Last year saw 13 unicorn exits, including IPOs by Stitch Fix, Roku and Blue Apron, as well as PetSmart’s acquisition of Chewy for $3.4 billion.

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