Venture capital firms are investing more money in fewer companies, closing 1,699 deals worth a combined $21.5 billion in the third quarter and 5,948 transactions worth $61.4 billion in the nine months ended Sept. 30, according to the latest report by the National Venture Capital Association and PitchBook.
Third-quarter venture capital transactions are down 6% in value from the $22.94 billion in the previous quarter and deals were down 21% from the 2,154 deals in the second quarter. Compared to the third quarter of 2016, the aggregate transaction value was up 40% from $15.3 billion but the number of deals was down 17% from 2,056.
In all of 2016, venture capital firms invested in 8,637 deals with a total value of $71.8 billion. The PitchBook-NVCA report noted that if the investment pace holds, venture capital firms could invest the most dollars in 2017 than in the past 10 years.
Investments in companies valued at $1 billion or more accounted for less than 1% of total transactions in the first three quarters of 2017 but represented 22% of the total deal value, the PitchBook-NVCA Venture Monitor report shows.
Still, exit activity is down with venture capital firms exiting 530 venture capital valued at $36.4 billion in the nine months ended Sept. 30. If exit activity maintains the current pace, venture capital firms could end the year with 707 exits compared to 839 total exits worth a combined $53.8 billion in all of 2016. Private equity buyouts accounted for $5.22 billion of exits in the first nine months of 2017, the most in terms of value that PitchBook has recorded.
The time it takes to achieve an exit is longer, with the median time 5.17 years, up from 4.85 years in 2016 and 4.45 years in 2010.