Venture capital firms invested $19 billion in 1,206 U.S. portfolio companies in the quarter ended Sept. 30, relatively flat from $18.9 billion in 1,208 transactions in the previous quarter and up from $14.4 billion in 1,286 deals in the year-earlier quarter, according to the MoneyTree Report from PricewaterhouseCoopers and CB Insights.
Some 40% of the deal value in the third quarter was from so-called mega rounds — which are venture capital investments of $100 million or more — representing 26 transactions. The three largest investments in U.S. companies were made by Japan's SoftBank Group's Vision Fund: a $1.7 billion investment and a separate $760 million investment in New York-based work space rental company WeWork; and $1 billion in Jacksonville-based e-commerce marketing firm Fanatics.
"This is pretty consistent with what we have been seeing over the last few years, companies are raising larger and larger amounts of (venture capital)," said Tom Ciccolella, partner and PwC's U.S. venture capital leader, in an interview. "Companies have more private funding than ever historically and they are allowed to stay private longer. I'm not sure the trend will reverse itself."
The most deals involved Internet companies, accounting for 48% with $7.9 billion invested in 574 deals. Internet deal share at the end of the third quarter was up from 44% in the prior quarter ended June 30 and down from 49% in the year-earlier quarter.
About $1.1 billion was invested in 91 transactions in artificial intelligence companies, exceeding $1 billion in AI companies for the third straight quarter. Yet, venture capital funding for artificial intelligence companies was flat from the second quarter, with $1.1 billion invested in 89 transactions, but exceeds the $769 million invested in 75 deals in the quarter ended Sept. 30, 2016.