SA国际传媒

Apparently, the laws of gravity do not apply to North American startup investment.

For the fourth quarter in a row, the sum of venture capital poured into U.S. and Canadian companies rose sequentially and year-over-year. Altogether, investors are projected to put a whopping $35.3 billion to work. That money is dispersed across seed-stage through technology-growth stage deals in the third quarter of 2018, the highest projected total since SA国际传媒 began tracking this data.

A lot of really big, late-stage deals pushed the totals to new highs. Rounds of $100 million or more鈥攐nce a rarity in startup-land鈥攚ere a near-daily occurrence. Investments of a few hundred million popped up frequently as well for companies in transportation, real estate, and even e-cigarettes.

Early-stage dealmaking also held up at robust levels, though with a tinge less frenzied exuberance. Exits were pretty good, too, bolstered by several prominent tech unicorns launching well-received IPOs. Acquisition activity was more muted, but a few big deals still unfolded during the quarter.

Below, we break down the numbers in greater detail, focusing on Q3 investment totals and round counts, stage-by-stage performance, largest rounds, and biggest exits.

Investment Totals

These are extravagant times in the venture capital world. Total investment rose nearly 13 percent quarter-over-quarter across all stages in Q3, according to SA国际传媒 projections. That鈥檚 a big jump and pretty astounding considering that Q2 was itself an extraordinarily spendy quarter for all things startup-related.

Year-over-year, the gains are even greater. The $35.3 billion invested in Q3 of 2018 represents a rise of nearly 19 percent from the same quarter last year. In the chart below, we look at how the investment totals break down over the past five quarters:

Round Counts

While venture deals are getting bigger, they鈥檙e not getting more numerous. The number of projected seed, venture and tech growth rounds in Q3 of 2018 is up year-over-year, but is actually down a bit from Q2 levels.

SA国际传媒 projects a total of 3,825 rounds across all stages for Q3 of 2018. That鈥檚 up 16 percent from year-ago levels, but down about 7 percent from the prior quarter. In the chart below, we look at how round counts break down over the past five quarters:

The lead investors in these rounds are par for the course, with the being a notable addition.

Angel And Seed Stage

Seed-stage funding also held up at historically high levels, though it appears to have slowed a bit from the prior quarter.

SA国际传媒 projects that nearly 2,200 U.S. and Canadian companies secured angel or seed rounds in Q3 of 2018. That鈥檚 down a couple percent from the prior quarter and up about 15 percent from year-ago levels.

Total investment in seed-stage companies, meanwhile, is projected at around $1.4 billion, also down a bit from the prior quarter and up from year-ago levels.

was the most active seed-stage investor with 53 investments. , the runner-up, came in with a comparatively modest 25 investments.

Early Stage

Early-stage (Series A and B) investment remained at historically high levels in the just-ended quarter. However, there wasn鈥檛 a sharp spike in funding.

Overall, investors put $12.3 billion to work in early stage rounds in Q3 of 2018. That鈥檚 roughly flat with the prior quarter and up about 25 percent from year-ago levels.

A handful of extra-large deals lifted the totals. While supergiant rounds are normally relegated to late stage, we saw a number at Series A and B as well, primarily for companies in biotech, but also enterprise software and autonomous driving.

Early stage rounds usually go to young companies, but that isn鈥檛 always the case. Several of the biggest Q3 Series A and B fundings were actually for fairly mature companies that waited to dip into the venture pool, including , founded in 2008, and , founded back in 2003.

Below, we look at some of the biggest early stage funding recipients:

Y Combinator once again tops the list of early stage investors, but with only a slim margin over .

Late Stage And Growth Stage

Over the past few quarters, the most dramatic trend in startup funding has to be the rise of 聽supergiant rounds.

Until recently, these monolithic fundings of $100 million or more were a rarity in venture circles. Now, they鈥檙e commonplace. For Q3 of 2018, for instance, at least 47 U.S. and Canadian companies raised supergiant rounds, including at least ten valued at $300 million or more.

These giant financings contributed to pushing late stage funding totals to what appear to be record levels. For Q3 of 2018, investors put just over $20 billion into late stage deals (Series C and later). That鈥檚 up a staggering 61 percent from year-ago levels, and up 36 percent from the prior quarter.

Established unicorns drank up much of the funding. The list includes enterprise messaging platform , stationary bike and spin class purveyor , and secondhand shopping app .

Real estate startups also saw a big jump, thanks to SoftBank. In the final week of the quarter, the firm鈥檚 backed $400 million rounds for two U.S.-based unicorns, , a tech-enabled real estate brokerage, and , a company that offers fast home sales.

Below we look at 10 of the largest late-stage funding recipients:

was the most willing to make late-stage deals in Q3, with the Softbank Vision fund notably falling to the bottom of the list.

Exits

So it鈥檚 clear from the numbers that investors put a lot of money into the startup ecosystem last quarter. But how did they do in terms of getting money back?

Overall, it looks like a very solid run for IPOs in Q3, while returns from M&A were a bit more lackluster. We鈥檒l look at returns for both exit types below.

First, IPOs. The window for tech and life science offerings was wide open this past quarter, and quite a few venture-backed companies capitalized on the opportunity to go public. Standouts on the tech front included and , two long standing unicorns that launched well-received IPOs. This biggest monster hit, however, was Canadian cannabis company , recently valued around $13 billion (and no, it鈥檚 not profitable).

Public market investors have been extra willing lately to overlook unprofitability for companies with growing revenues, and that鈥檚 contributing to the current venture-backed IPO boomlet. Over the first three quarters of this year, 83 percent of U.S.-listed IPOs lost money in the 12 months leading up to their debuts, and Q3 in no way deviated from 聽trend.

Below, we look at some of the largest North American venture-backed companies that IPO鈥檇 this past quarter:

Now let鈥檚 look at M&A. For Q3, the biggest deal was Cisco鈥檚 purchase of cybersecurity unicorn for $2.35 billion. There were a number of other sizeable deals announced during the quarter as well, several of which we highlight below:

There鈥檚 no surprise in seeing M&A levels underwhelm compared to the prior quarter. It was always going to be tough for Q3 of this year to measure up to Q2, which included Microsoft鈥檚 GitHub acquisition, the largest purchase of a venture-backed tech company in years. That said, Q3 still turned out to be a reasonably strong quarter for acquisitions; it just wasn鈥檛 spectacular.

Looking Ahead

As we鈥檝e noted previously, current investment conditions do show many characteristics of a market peak: a large pool of available venture and growth capital, a wide-open IPO market, unusually big funding rounds, and little pressure for profitability.

However, our datasets aren鈥檛 engineered to predict how long the current bullishness will last. All we know is that, eventually, market cycles do turn.

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