Sat, Jul 09, 2016 - Page 10 News List

‘Unicorns’ snatch largest chunk of venture capital

Bloomberg

Uber Technologies Inc, Snapchat Inc and other unicorns snagged the most funding from venture capitalists in the first half of this year as the industry sets pace for another record year.

Venture investors plowed US$40 billion into US start-ups during the first half, according to a report on Thursday from PitchBook Data Inc, an amount on track to match the US$79 billion invested last year.

While plenty of money is up for grabs, most of it is going to large, late-stage companies including unicorns, private companies valued at US$1 billion or more.

Uber’s US$5.6 billion Series G round, for example, accounted for 28 percent of all venture capital deployed during the second quarter, according to PitchBook.

Finance rounds that were US$25 million or more have accounted for more than 66 percent of all venture capital invested so far this year.

On the other hand, early-stage companies have had a tougher go of it with investors making fewer bets on new ideas.

With just 990 angel and seed stage deals for the first half, the volume of new start-ups getting funded is hovering at about the levels seen in 2012. While this is hardly a record low — it is still triple the number backed in 2010 — it is a come down from the “back everything” mentality that dominated much of venture investing in recent years.

Venture firms are not hurting for cash. Buoyed by the billion-dollar-plus funds raised by the likes of Andreessen Horowitz and Kleiner, Perkins, Caufield and Byers, 134 venture firms closed funds totaling US$22.5 billion during the first half. That puts the industry on pace to beat a record stretching back to at least 2006.

Separately, Uber closed a US$1.15 billion high-yield leveraged loan, a person familiar with the matter said, bringing the total equity and debt raised by the ride-hailing mobile app to more than US$15 billion.

Uber was last month seeking to raise US$1 billion to US$2 billion in debt.

Creditors will receive about a 5 percent yield on the loan, the person said.

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