Venture capital investments soared in the Boston area last year, as vast sums of money continue to flow to a relatively small pool of companies.
Venture investors poured $8.7 billion into Boston-area companies in 2017, a nearly 40 percent jump from the $6.3 billion in venture capital invested locally during the previous year, according to data from the Venture Monitor report released this week by Seattle-based PitchBook and the National Venture Capital Association. Their analysis found that last year’s local VC total was the highest since at least 2006, the earliest year for which PitchBook and the NVCA provided data.
At the same time, local deal count last year was basically flat—that $8.7 billion was invested in 528 companies, through 545 deals. The previous year saw 511 Boston-area companies pull in 539 VC deals. In 2015, investors pumped $7.9 billion into 653 local companies, through 699 deals.
Boston VC trends mirror what’s happening nationwide. U.S. VC funding reached $84.2 billion last year, a level not seen since the dot-com era of the early 2000s, according to the Venture Monitor report. (A similar analysis of VC deals, the MoneyTree Report from PwC and CB Insights, found $71.9 billion was invested in the U.S. last year, up 17 percent from the previous year.)
But investors are placing bigger bets on fewer companies, many of them later-stage ventures. The number of U.S. VC deals declined to 8,076 last year, down from 8,635 in 2016 and 10,463 in 2015, per Venture Monitor data. Last year, investments in so-called “unicorns”—venture-backed companies valued by their investors at $1 billion or more—accounted for nearly 23 percent of total dollars invested, but less than 1 percent of overall deal volume, according to the Venture Monitor. The MoneyTree Report tallied 5,052 VC deals in the U.S. in 2017, a 4 percent year-over-year drop, and the lowest annual total since 2012.
For Boston, one of the questions is how the broader concentration of capital in fewer, later-stage companies will affect the local early-stage startup scene.
The fourth quarter of 2017 was the most active of the year for Boston-area VC investments, according to the Venture Monitor. It found investors deployed $2.8 billion across 130 deals, up from $2.3 billion in 129 deals in the third quarter, and $1.2 billion in 142 deals in the fourth quarter of 2016.
Here are the top five funding deals for Boston-area companies in 2017, per PitchBook and the NVCA:
1. Intarcia Therapeutics, $615 million
2. Ginkgo Bioworks, $275 million
3. WuXi NextCODE, $240 million
4. Indigo Ag, $203 million
5. Cullinan Oncology, $150 million
