*UPDATE: OC’s VC and IPO Summaries for Q4 2018
Ernst & Young has released its Q4 2018 summary on equity financing for U.S. venture-backed companies, with data sourced by Crunchbase.
Specifically looking at OC, there were a total of 35 deals – totaling $322 million in VC funding – in the fourth quarter.
Funding in LA increased by more then 80% in Q4. LA saw 127 deals totaling approximately $2.6 billion in this time frame. One large deal contributed 20% of this total. That deal was done by SpaceX, which raised about $273 million in a series J round from Baillie Gifford. SpaceX also raised $250 million in debt financing from Bank of America.
Space X, short for Space Exploration Technologies Corp., is an aerospace manufacturer and space transportation services company, founded by Elon Musk, with HQ in Hawthorne,
And, SD saw 38 deals totaling $978 million in Q4.
The National Scene in Q4
Nationally, VC-backed startups – unlike the stock market – continued their massive bull run in the fourth quarter of last year, and ended the year by smashing all prior records.
Across the country, VC-backed startups raised approximately $47 billion in Q4 2018, an increase of 43% over Q3.
That put the total amount invested in 2018 at a “staggering” $138 billion, far above anything E&Y has ever seen before.
Contributing to the white-hot year of 2018 were corporations and private equity investors, which dramatically increased funding activity, as well as a 57% increase of mega-rounds ($100 million-plus).
Deals are getting fewer and dollars are getting larger.
The top 10 U.S. deals accounted for 45% of all dollars invested in Q4.
More and more, investment is trending towards later-stage companies. In Q4, over 60% of funds went to these companies.
West Coast regional breakdown:
Overall, the West Coast, (Seattle down to San Diego), raised about $31 billion, or 66% of all capital in Q4.
Deals by Segment:
Led by the top deal in the U.S., consumer goods raised 43% of all capital on the West coast. That deal was done by JUUL, which raised close to $13 billion from Altria. JUUL is an electronic cigarette company, with HQ in SF, which spun off from PAX Labs in 2017.
Information Technology (IT) rounded out the top three U.S .deals with $5.5 billion raised.
In the West, business services raised $5.6 billion and accounted for two of the top 10 U.S. deals.
IPO Stats for 2018
This equity report follows a report EY recently put out regarding IPO’s in Q4 2018. For the end of last year, IPO activity charted a steady course, despite volatility and uncertainty, Tim Rahall, an assurance partner with EY who focuses primarily with tech companies, told OC Startups Now.
OC saw three IPO’s in all of 2018, about average, he said.
Rahall said OC is reflective of the entire country, where “everyone seems to be pausing a little bit due to numerous factors, whether it’s uncertainty from a trade policy standpoint or the very volatile stock market.”
“I think, from talking with companies, they’ll continue to wait and see, and wait for the right time in the first half of 2019, it may be a little slower market,” Rahall said. “But at the same time, there’s so much money (invested) in these (startups). OC has had significant investment from private equity and venture capital, and some of these investments have been in for a while. Some investors want to have success stories, I think investors will still look for that time to exit, I’m just not sure that will be in the first half (of 2019).
Axonics, with HQ in Irvine, is a med-tech company that developed a therapy that’s primarily used to treat patients with overactive bladder, fecal incontinence and urinary retention.
Evolus, with HQ in Newport Beach,is a medical aesthetics company. And, Hancock Jaffee, with HQ in Irvine, develops medical devices for patients with cardiovascular disease.
OC private companies are continuing to get funding and growing, Rahall said, adding that he believes that’s “as much or more of a measure of the health of the business community as our IPO report.”
National IPO Scene Q4 2018
Nationally, the tech sector led with a record number of 40 unicorn IPOs, raising about $32 billion in 2018.
The number of companies considering the public markets in 2019 – including multiple unicorns, – suggests that the entire Americas’ IPO market has much to look forward to this year.
The US dominated IPO activity in the entire Americas region, representing 79% of this region’s deal number and 88% by proceeds. Volume and proceeds exceeded that of 2017.
Proceeds were up in the Western region by 22%. The number of IPO’s shot up 65% in the West, heavily driven by the lifescience marketplace.
While the fourth quarter was weak, the year ended as expected, with 2018 activity held back toward the end of the year by geopolitical tensions and trade issues between the US, China and the EU, as well as the looming exit of the UK from the EU.