BIG MONEY, FEW DEALS
Good morning, Term Sheet readers.
Venture capital spending in 2017 is on track to reach a decade high, according to new data from the PitchBook-NVCA Venture Monitor. Venture investors deployed $21.5 billion to more than 1,699 venture-backed companies during the third quarter, bringing the year’s total investment to $61.4 billion.
But here’s the twist. Investors are pumping larger amounts of capital into fewer companies. In other words, a small percentage of deals are driving much of the growth in the sector. Remember when WeWork raised $3 billion in venture funding from SoftBank? These types of mega-deals have created a sluggish exit market, which is pacing for the lowest number of exits since 2010.
“The trends of fewer companies receiving investment and the concentration of dollars into unicorns and later-stage rounds signal a new normal for the venture industry,” said Bobby Franklin, president and CEO of NVCA, in a statement. “Sitting on record-levels of dry powder, venture investors will continue to deploy capital into innovative companies, albeit at a likely slower pace.”
Here are some more of the key findings from the report:
• Late-stage companies are getting all the attention: Across all of 2017 to date, late-stage deals account for more than 20% of total deal count for the first time in five years. Angel and seed investments, on the other hand, aren’t doing so hot. They have fallen below the 50% mark of completed financings for the first time since 2012.
• Venture-backed companies are delaying exits: Why exit when there’s so much private funding available? The total number and value of exits has fallen significantly. In 2017, we’re on track to hit 707 exits for the full year, compared to 839 total exits in 2016. As the number of IPOs has decreased, private equity is coming to the rescue to buy venture-backed companies. 2017 has seen the highest exit value from PE buyout transactions ever recorded — at $5.22 billion or just over 18% of 2017 exits.
• Fundraising activity is slowing: After several quarters of strong fundraising, Q3 was a little sluggish with just $5.3 billion raised across 34 funds. That’s a $10.9 billion decrease across 60 funds from the previous quarter. General partners have adapted to the industry trend of larger deal sizes and valuations by raising larger funds and fewer follow-on micro VC funds.
MOST POWERFUL WOMEN SUMMIT: Fortune’s Most Powerful Women summit kicked off yesterday with a panel discussion called, “Working with Washington on the Future of Work.” Panelists included Ivanka Trump, Cathy Engelbert, and Marillyn Hewson. (Here’s a recap of that session.)
On the agenda today (times are in EST):
9:15 a.m.: PepsiCo CEO Indra Nooyi
9:35 a.m.: Thrive Global founder and CEO Arianna Huffington
12:00 p.m.: GM CEO Mary Barra
8:00 p.m.: Justin Trudeau, Prime Minister of Canada
Watch the conference live here (for free!).
THE LATEST FROM FORTUNE...
• Ivanka Trump calls for 'long-term Congressional fix’ to DACA program (by Claire Zillman)
• You can buy citizenship to an island nation for 44 Bitcoin (by Natasha Bach)
• Self-driving delivery trucks could be hitting city streets next year (by Kirsten Korosec)
• Nokia pulls out of virtual reality business (by David Meyer)
Twitter will launch a bookmarking tool. How Russian agents used American social media. Amazon considers a more serious bid against YouTube. Cryan is losing investor support. China has become a big supporter of electric cars.
• Tujia.com, a China-based short-term property rental firm, raised $300 million from investors, valuing it at more than $1.5 billion. Ctrip.com International Ltd and All-Stars Investment led the round, and were joined by China Renaissance’s New Economy Fund, Glade Brook Capital, and G Street Capital. Read more at Fortune.
• Mapbox, a Washington D.C.-based mapping and location platform for developers, raised $164 million in Series C funding. SoftBank Vision Fund led the round, and was joined by investors including Foundry Group, DFJ Growth, DBL Partners, and Thrive Capital.
• Bill.com, a Palo Alto, Calif.-based business payments network, raised $100 million in funding. JPMorgan Chase and Temasek led the round.
• Zume Pizza, a Mountain View, Calif.-based pizza delivery startup, raised $48 million in funding, according to an SEC filing. The target is $50 million. The company previously raised over $23 million from AME Cloud Ventures, Maveron, SignalFire, and Kortschak Investments.
• Andela, a New York-based company connecting Africa’s top developers with global companies in need of tech talent, raised $40 million in Series C funding. CRE Venture Capital led the round, and was joined by investors including DBL Partners, Amplo, Salesforce Ventures, TLcom Capital, Chan Zuckerberg Initiative, GV, and Spark Capital.
• Shockwave Medical, a Fremont, Calif.-based developer of devices for the treatment of calcified cardiovascular disease, raised $35 million in funding. Investors include New investor Fidelity Management & Research Company and T. Rowe Price Associates, Inc.
• Verve, the U.K.-based startup formerly known as StreetTeam that offers a sales platform to enable brands to run advocacy programs, raised $18.5 million in Series B funding. VC Draper Esprit led the round, and was joined by investors including Kindred, Frontline Ventures, and Backed.
• Sight Sciences Inc, a Menlo Park, Calif.-based ophthalmic medical device company, raised $10 million in Series C funding. Allegro Investment Fund led the round.
• HIPPEAS, a Los Angeles, Calif.-based natural snack food company, raised $10 million in funding from CAVU Venture Partners.
• LumApps, a France-based enterprise portal fully integrated with Google’s G Suite, raised $8 million in Series A funding. Idinvest Partners led the round.
• ImaginAb, an Inglewood, Calif.-based immuno-oncology imaging company, raised $8 million in funding. Adage Capital led the round.
• Visor, a San Francisco-based online tax filing and advisory service, raised $6.5 million in seed funding, Obvious Ventures led the round, and was joined by investors including Social Capital, Maveron, Lux Capital, Fika Ventures, Box Group, Niklas Zennström, and Keith Coleman.
HEALTH AND LIFE SCIENCES DEALS
• Harmony Biosciences, a Plymouth Meeting, Penn.-based biopharmaceutical company, raised $270 million in funding. Investors include Valor Equity Partners, Fidelity Management & Research Company, HBM Healthcare Investments, Vivo Capital, venBio Partners, Novo Holdings and Nan Fung Life Sciences.
• PanOptica Inc, a Bernardsville, N.J.-based developer of ophthalmology therapies, raised $11 million in Series B funding. Investors include Third Rock Ventures and SV Health Investors.
PRIVATE EQUITY DEALS
• Bain Capital Private Equity made an offer for Zenith Hygiene Group plc, a UK-based maker of cleaning and hygiene chemicals and related products. Financial terms weren’t disclosed.
• Ionisos, which is backed by Ardian, acquired Scandinavian Clinics Estonia, an Estonia-based provider of sterilization solutions. Financial terms weren’t disclosed.
• Marlin Equity Partners acquired a majority stake in AppRiver, a Gulf Breeze, Fla.-based provider of cloud-based cybersecurity and productivity software and services. Financial terms weren’t disclosed.
• The Halifax Group invested in Delphi Behavioral Health Group LLC, a Ft. Lauderdale, Fla.-based provider of addiction and mental health programs, through a recapitalization. Financial terms weren’t disclosed.
• Industrial Opportunity Partners made an investment of an undisclosed amount in Creative Foam Corp, a Fenton, Mich.-based developer of foam products. Financial terms weren’t disclosed.
• Helix Energy Solutions Group Inc (NYSE:HLX) is exploring strategic alternatives, including a potential sale, according to the Wall Street Journal. Read more.
• Honeywell International Inc (NYSE:HON) will spin off its home and ADI global distribution business and transportation systems into two independent, publicly-traded companies by end of 2018, according to Reuters. The two businesses are worth a total of $7.5 billion. Read more.
• Cruise, the self-driving car startup GM acquired last year, acquired Strobe, a Pasadena, Calif.-based LiDAR sensor maker that reduces an entire LiDAR array down to just one chip, according to TechCrunch. Read more.
• Pfizer Inc (NYSE:PFE) is reviewing strategic alternatives for its consumer healthcare business, including a full or partial separation of the unit. Read more.
• Google acquired Relay Media, a developer of technology to help convert web pages to the AMP format, according to TechCrunch. Read more.
• Bakkavor, a ready meal supplier in London, is planning an IPO in the city that could value it at $2 billion, according to sources interviewed by Reuters. Marks & Spencer, Waitrose and Tesco are among the firm’s customers. Bakkavor is backed by Baupost. HSBC and Morgan Stanley are leading the deal. Reuters.
• HelloFresh, a German meal kit delivery company, is seeking an IPO that could value it at $1.8 billion in Frankfurt. The company plans to sell new shares worth up to $354 million. That comes after its sister organization, Delivery Hero, raised $1.13 billion in its IPO in June. Both are backed by Rocket Internet. Reuters.
• TPG Capital acquired Transplace, a Frisco, Texas-based provider of transportation management and logistics technology. The seller was Greenbriar Equity Group. Financial terms weren’t disclosed.
• Kohlberg, Kravis & Roberts acquired Covenant Surgical Partners, a Nashville, Tenn.-based owner and operator of ambulatory surgery centers focused on endoscopy and ophthalmology specialties. The seller was DFW Capital Partners. Financial terms weren’t disclosed.
• Avizia acquired Carena, a Seattle-based virtual care provider. Financial terms weren’t disclosed, but Carena had raised approximately $48 million in venture funding from investors including Catholic Health Initiatives, McKesson Ventures, Martin Ventures, and Benaroya Capital.
FIRMS + FUNDS
• Carrick Capital Partners, a San Francisco-based private equity and venture capital firm, is seeking to raise $400 million for its third venture fund, according to an SEC filing.
• Greg Yap joined Menlo Ventures as a partner.
• CVC Capital Partners named Anish Mehta as CEO of the international women’s health assets portfolio. Previously, Mehta was at Allergan.
• Michelle Dipp joined General Atlantic as a managing director, and Andy Slavitt joined as a special adviser.
• Melody Koh is joining NextView Ventures as a venture partner.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.