RESEARCH TRIANGLE PARK – Despite the total number of initial public offerings and company mergers and acquisitions decreasing in the third quarter of 2018, venture capital investment in U.S.-based companies hit an all-time record, eclipsing the dot-com bubble peak by 17 percent, the VentureSource venture capital report from Dow Jones found this week.

The same report found that North Carolina-based firms raised more than $200 million in the quarter and have topped $1 billion for the year.

According to the report, investment in U.S.-based companies surged by 14 percent in the third quarter, compared to the second quarter of 2018.  Total investment in U.S.-based companies now exceeds the peak of the first dot-com bubble (the first quarter of 2000) by 17 percent, despite the total number of deals being down by 26 percent compared to the first quarter of 2000, the peak of the dot-com bubble.

In fact, according the dataset, compiled and archived by Dow Jones, median deal size decreased in the third quarter of 2018, indicating that the jump in total funding was concentrated in a handful of extremely large fundraising rounds, particularly in the business and financial services sector, consumer goods sector, and consumer services sector.

VentureSource graphic

Tracking VC investing

Eight companies raised mega-rounds of more than $400 million: Lucid Motors Inc. ($1 billion), NewTV ($1 billion), JUUL Labs Inc. ($650 million); Peloton Interactive Inc. ($550 million); Ambatana Inc. ($500 million); Uber Technologies Inc. ($500 million); Zoox Inc. ($500 million); and Samumed LLC ($438 million).

While total funding increased, IPO market and M&A deal values decreased by 12 percent compared to the previous quarter.  Compared to last year, when there were eight initial public offerings and 182 mergers or acquisitions, the third quarter of 2018 saw 21 IPOs and 202 mergers or acquisitions.

VentureSource graphic

Tracking VC deals by segment


Companies collected $33.02 billion through mergers or acquisition in the third quarter of 2018, with the largest acquisition in the quarter coming from Cisco Systems acquisition of Duo Security Inc. for $2.35 billion, announced on August 2, 2018.  Notable companies that raised funds through an initial public offering include cybersecurity firm Tenable Holdings Inc. ($250.7 million—NASDAQ ticker symbol TENB), online ticket and event management company Eventbrite Inc. ($230 million—NYSE ticker symbol EB), and wireless speaker manufacturer Sonos Inc. ($83.33 million—NASDAQ ticker symbol SONO).

NC accounts for more than 25 percent of Southeast deal flow

The southeastern region saw 77 deals worth a total of $890 million in the third quarter of 2018, with 20 deals for companies based in North Carolina.  Silicon Valley companies raised $14.28 billion and companies in the mid-Atlantic raised $6.32 billion by comparison.

VeutureSource graphic

Where VC money went by region

North Carolina companies raised a total of $261.71 million in the third quarter of 2018, down 42 percent after the record-breaking second quarter, where companies raised $454.87 million.  Total funding year-to-date to North Carolina companies has now crossed $1 billion, with $1.07 billion raised across 60 total deals.

Though the first three quarters of the year have seen a wide range of total deal value—the first quarter deals were worth $353.96 million—the number of deals has been consistent.  20 deals were inked in the third quarter compared to 21 in the second quarter and 19 in the first quarter.

The more than $1 billion raised in the first three quarters nearly totals the total funding raised in all four quarters in 2017 ($1.16 billion), which was a record-breaking year for total venture capital investment into North Carolina companies.

More VC data

Two other VC reports were issued earlier this week with different numbers based on criteria that vary by source. Our coverage:

Venture capital investing races toward record, tops $1B in North Carolina

Report: Deal volume slows but mega investments drive VC funding to $28B – $200M in NC