7 Things Entrepreneurs Need to Know About the State of Venture Capital

Software, life sciences and biotech are among the industries getting the most love.
Entrepreneur Staff

Raising venture funding is never easy, but it would seem that the industry as a whole is trending in a positive if more measured direction.

While there has been a slight increase in the amount of money that was invested in the first three months of 2017 compared to the last quarter of 2016, the number of companies that received funds hasn’t been this low since quarter four of 2011, according to PitchBook-Venture Monitor, a quarterly report.

“It’s easy to look at the numbers and assume the industry is starting to lose its footing, but we don’t think that’s the case,” said John Gabbert, founder and CEO of PitchBook, which along with National Venture Capital Association (NVCA) publishes the report. “We see this as investors and entrepreneurs returning to a more disciplined approach to investing. Both parties are having to exercise more caution in the market and conduct the necessary due diligence to pencil out fair deals on both sides.”

Related: 3 Shifts That Signify Where Venture Capital Is Headed This Year

Here are a few facts to get up to speed on the state of the venture capital industry:

  • In the first quarter of the year, venture capitalists invested $16.5 billion in 1,797 companies.
  • Angel and seed investments were down from this time last year: 827 deals were recorded completed in the first quarter of 2017 compared to 1,223 in the first quarter of 2016.
  • Two of the industries that saw the biggest amount of investments were life sciences and software. They saw the majority of deals, with 930 completed in the first quarter of 2017.
  • The industries that had the most exits in Q1 2017 were software, biotech and commercial services, which accounted for 73 percent of total exits.
  • VCs invested in companies in 46 states and the District of Columbia.
  • Half of all the capital distributed in the first quarter, $8.3 billion, went to 560 companies in California.
  • Sixty-nine percent of all the startups in the U.S. that received investment were outside of California.
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