Unicorns Snag Most Venture Capital in First Half of 2016

  • Bigger rounds, fewer startups deals in first two quarters
  • Venture funding on pace to match 2015’s record $79 billion

Uber Technologies Inc., Snapchat Inc. and other unicorns snagged the most funding from venture capitalists in the first half of 2016 as the industry sets pace for another record year.

In total, venture investors plowed $40 billion into U.S. startups during the first half of this year, according to a report Thursday from PitchBook Data Inc., an amount on track to match the $79 billion invested in 2015.

While plenty of money is up for grabs, most of it is going to large, late-stage companies including unicorns, private companies valued at $1 billion or more. Uber’s $5.6 billion Series G round, for example, accounted for 28 percent of all venture capital deployed during the second quarter, according to PitchBook. Finance rounds that were $25 million or more have accounted for more than 66 percent of all venture capital invested so far this year.

On the other hand, early-stage companies have had a tougher go of it with investors making fewer bets on new ideas. With just 990 angel and seed stage deals for the first half of 2016, the volume of new startups getting funded is hovering around 2012 levels. While this is hardly a record low -- it’s still triple the number backed in 2010 -- it is a come down from the “back everything” mentality that dominated much of venture investing in recent years.

Venture firms aren’t hurting for cash. Buoyed by the billion-dollar-plus funds raised by the likes of Andreessen Horowitz and Kleiner, Perkins, Caufield & Byers, 134 venture firms closed funds totaling $22.5 billion during the first half of 2016. That puts the industry on pace to beat a record stretching back to at least 2006, according to PitchBook.

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