Globally, 2016 was a bullish year for investment in the startup ecosystem with venture investment at its highest level in five years - CrunchBase

Print 19 January 2017
CrunchBase

The new year is upon us, and it’s a great time to set out on the right foot by incorporating data into decision-making and business strategy. Crunchbase has access to all data around the innovation economy, and we’re illuminating the trends from 2016 – and what to look out for in 2017 in "The Global Innovation Investment Report-2016".

Globally, 2016 was a bullish year for investment in the startup ecosystem with venture investment at its highest level in five years. However, the U.S. funding environment slowed considerably.

The most pronounced contraction for U.S. startup investment occurred in the fourth quarter, with impact across all stages. We are projecting that U.S. Q4 funding counts will be the lowest in more than three years for seed and early stage investment, down more than 32% from 2015 levels. While prior quarters in 2016 had shown decreases in late stage funding, the fourth quarter also saw a steep drop in early stage and seed deals.

The exit climate was mixed in 2016. Venture-backed IPO activity was weak overall, with U.S. technology offerings hitting a multi-year low. That said, life sciences offerings were more numerous, and a handful of companies in both tech and biotech did carry out large IPOs. Meanwhile M&A, which accounts for most exits, held up at robust levels.

Noteworthy 2016 trends

• Global VC Grew 19%: Total venture and seed funding for 2016 is projected to be $176 billion. This marks the highest annual total in the past five years.

• U.S. VC investments down 11%: U.S. venture investment is projected to be $76 billion in 2016, down from $86 billion in 2015.

• Decline in new unicorn formation: In 2015, a private unicorn was created almost every three days. No more. Investors minted fewer than 40 companies with disclosed or reported first-time valuations of $1 billion in 2016.

• Number of U.S. seed rounds down 25%: The number of angel and seed rounds fell to its lowest point since 2012. Early and late stage rounds also saw dropoffs of 5% and 14% respectively.

• Seed deals got larger, but became harder to raise towards the end of the year. The average reported angel-seed investment rose 30% in 2016 to 900k, but deal volume saw a 15% drop in the final quarter of the year.

The Global Innovation Investment Report includes six sections highlighting funding trends, notable sectors, important startup regions, and more. 

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