Bucking the trend, round sizes in venture deals climb

Late-stage valuations have taken a hit and more pre-IPO deals are stumbling into down rounds, but round sizes for venture capital deals aren’t yet shrinking in broad measure.

In fact, round sizes in U.S.-based deals have climbed in early 2016, and they essentially match those of the middle of last year, when the enthusiasm for richly valued deals was higher.

The average deal size for the 430 U.S.-based, VC-backed deals completed year-to-date through Feb. 23 is $18.5 million, according to an analysis of data from Thomson Reuters. That’s up more than 50 percent from the final quarter of 2014.

Even when the figure is adjusted for the year’s two largest deals—the $1 billion funding of Lyft, which Thomson Reuters recorded in January, and the $793.5 million funding of Magic Leap—the average round size is $14.4 million, still an increase.

This adjusted average matches the round sizes in the second and third quarters of last year.

Worth noting is that the increase shows up across all deal stages, from early to expansion to late, according to an analysis of the data. And it is evident in technology and life sciences deals.

Helping to fuel the rise are corporate VCs. Corporates are showing a willingness to put more money in transactions this year than last year. Even when adjusted for the $500 million that General Motors invested in Lyft, the average corporate round size is up from all but one quarter last year.

So in the past several months, as venture investors have shown increased caution over deal valuations, round sizes show no restraint.

Photo courtesy of Shutterstock.

To download an Excel file: Average round sizes in venture capital deals