RESEARCH TRIANGLE PARK – Venture Capitalists invested over $28.2 billion—the largest amount of funding deployed since 2006—in 1Q 2018 according to the latest data release from a quarterly report from Pitchbook and the National Venture Capital Association (NVCA). Investments in North Carolina-based companies also hit their highest value—$430.89 million—since at least 2013 (the dataset dates to 1Q 2013).

That’s a nearly 213 percent increase since last quarter, and more than 3Q 2017 and 4Q 2017 combined.

Tracking venture capital deals (NVCA)

“The first quarter of 2018 picked up right where 2017 left off, with the largest amount of capital deployed into venture-backed companies in a single quarter since 2006, marking a very strong start to venture investment this year,” said Bobby Franklin, President and CEO of NVCA.

The quarterly data set only includes data from North Carolina as a state and the Raleigh-Cary MSA. Durham, Chapel Hill and Charlotte are all absent, but Raleigh-Cary also hit its highest value raised with $163.17 million raised across 11 deals—over $50 million greater than raised in all of 2017.

2017 Trends Continue

Many trends from 2017 continued in the first quarter of 2018:

  • The rate of exits continues to decline
  • Unicorns continue to account for the lion’s share of the fundraises with 18 percent of total funding going to them
  • Deal sizes are up
  • Deal volume continues to decline

One new trend emerged this quarter, though. After several years of growth in mega funds, demand for micro-funds—those that are smaller than $50 million—is increasing.

The evidence of this can be seen in 1Q data where half the total number of funds closed in 1Q were micro funds. Even though they dipped in number, mega fundraises still made up a large portion of funds raised with $7.9 billion committed to 54 funds.

Inside NC numbers

North Carolina fell in step with most of the national trends. As previously stated, total deal size increased dramatically between 4Q 2017 and 1Q 2018. The closest quarter in the past five years to this 1Q 2018 is 3Q 2015 where North Carolina companies raised $420.09 million.

Meanwhile, deal volume, or the number of deals the funding is spread across, dropped from 45 to 38 deals between this quarter and last. This means that while the average deal size increased (from $3 million to $11 million), the national trend of a greater concentration of the funding going to a smaller number of companies holds in North Carolina too.

North Carolina companies account for seven out of the top ten deals in the Southeast region in the NVCA data.

PrecisionHawk’s $75.12 million raise came in second behind a $963 million raise from Magic Leap, a Florida-based Augmented Reality wearable company.

The top seven is made up of companies from five NC cities—Raleigh, Durham, Morrisville, Wilmington, and Asheville.

As for exits, four North Carolina companies made the list of 12 exits that occurred in the Southeast region. The 1Q 2018 NC exits included Bivarus (acquired by Press Ganey),  TransLoc (acquired by Ford), Windsor Circle (acquired by OSG), and Farmshots acquired by Syngenta.

While they distributed more funding in 1Q 2018 than previous quarters, Venture Capitalists raised less in funding for their funds than in previous years. Fundraising for VC funds was down across the board, yet in North Carolina, fundraising didn’t just slow, it didn’t exist in 1Q 2018. According to the data, no new funds were established or raised in North Carolina.

However, last week Cary-based Cofounders Capital announced its first close on a new fund that could ultimately reach $50 million.