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2017: An Explosive Year in VC Investment

By Nathan Gore, Editor at The Fintech Times.

Backed by the growing Fintech scene, 2017 was once again a massive year for start-ups, both new and established, reflected in the boom in the amount of Venture Capital (VC) financing. In this report, the Fintech Times takes a look at all of the major VC developments from the last year. We take a look at the situation in Asia, Europe, and North America, and discuss some of the trends emerging globally. The data is sourced primarily from Dealroom and Money Tree.

So, 2017 was a big year in terms of investments, but just how big was it? Well, worldwide VC-backed investments totalled $164.4B, comprised of 11,042 deals. This represents yet another record breaking year, with the annual global funding total increasing by nearly 50%, resulting in a millennial high point for global financing activity levels. Deal activity was also on the up, increasing by 11% to over 11,000 total deals, and surpassing recent highs.


Asia was the driving force behind the impressive global activity numbers in the last year. The numbers speak for themselves: funding activity was up by 117%, and deal activity increased by 46%. This led to an overall figure $70.8B being invested across 2,847 deals, up from $32.7B in 2016.

What was behind this significant surge in activity? Large deals accounting for just over $11B in funding took place in Q4’17. Furthermore, Asia was also home to 5 out of the top 6 largest global deals of 2017, with 4 taking place in China, and 1 in India (with the other deal being Lyft in the USA).

There were two deals that stood out above all others, both taking place in Beijing, China: Didi Chuxing and China Internet Plus, who closed out 2017 with funding rounds of $4B. Didi Chuxing, launched in 2012 by an ex-Alibaba employee is a ride-hailing service conglomerate that has since bought out Uber China, raised this funding from investors such as the SoftBank Group, in order to “scale up investments in AI talent and technologies,” and “bring more innovative and diversified transportation services to broader communities around the world.”

China Internet Plus, also known as Meituan-Dianping, retails, and delivers Chinese food from local restaurants online. It also runs a social commerce platform, which offers group discounts on a variety of services and products. It plans to use its $4B funding round, which was from a group of investors led by existing backer Tencent, to expand into in-store dining, lifestyle and entertainment, on-demand delivery and travel and leisure units.

Corporations appeared to be more involved, generally, in these investment deals in Asia, when compared to North America and Europe. Corporations participated in 35% of deals to VC-backed companies in Asia in Q4’17, a higher proportion that the other two markets.

Asia is also becoming a significant investor in European tech, with €3.4B invested from 147 deals. Mega funding rounds, powered by companies such as Tencent and SoftBank, are a good example of this. SoftBank, a Japanese Corporate Venture Capitalist (CVC), has gathered together a ‘Vision’ fund of around $100B, using it to invest in European assets such as the virtual simulation UK start up Improbable, and ARM, the UK-based chip designer.


And it is not just Asian VCs going for the European marketeveryone wants a piece of the action. 2017 was a massive year in terms of European investments and financial activity, with many records being broken. The total figure for annual European funding activity stood at $17.6B across 2,483 deals, respectively up 40% and 16% from 2016. As Tom Wehmeier, Partner & Head of puts it: “Europe’s entrepreneurial, talent, community, and capital foundations are strong. In fact, European tech today is the healthiest it has ever been[…] investors from Europe and beyond are backing the region’s entrepreneurs at record levels.”

What was driving this growth? In part, the increased number of big deals and large investment rounds, with 17 investment rounds of over €100m taking place, up on 13 from 2016. Some examples of the largest funding rounds among these include Deliveroo (€385m), Delivery Hero (€426m), and Improbable (€502m). However, even if you were to remove the top 10 highest investment rounds, then investment was still up by a significant 30%, something which underlines the strength of European growth in the last year. There is also an interesting trend to fewer larger rounds: fewer but larger early stage rounds, and increase in larger follow-on rounds above €5 million.

Despite such a successful year, there is still clearly room for growth within the European sector. Countries that are still lagging behind are Italy, Portugal, and Turkey; countries which are perhaps ripe for investment opportunities.

Talking about per capita investment, the UK has a very healthy figure by this metric, standing at $120, 4x the average over the whole EU. This year, UK investment grew by a very impressive 87%, to a total of €7.1B- which is more than the Germany, France and Sweden combined. UK investment, as a whole, now accounts for 37% of the total figure for Europe. Companies such as Improbable and Deliveroo are great examples of the companies that are driving forward UK VCbacked investment. These figures are not all completely UKdominated, however, as France has demonstrated significant and consistent growth with regards to the number of VC-backed rounds. In 2017, France actually overtook the UK in this metric (688 to 672), when you exclude crowdfunding rounds.

What sectors are being targeted with investment capital? Deep Tech, Fintech, and Healthcare were leading lights in Europe last year, with a combined €8B investment between them. AI also deserves an honourable mention too, thanks to a €2.2B increase in investment when compared to the annual average for the last 3 years.

This €8B figure is also interesting, because it is much larger than investments into B2C verticals such as Food, Travel, Content, and Fashion. It’s such a large amount that it even dwarfs the peak year of B2C investment growth, 2014-2015. B2B is really where the growth is currently at, thanks to companies live Roivant Sciences, Improbable, and Graphcore, to name a few.

Some of the areas that saw the most pronounced decrease in new activity in the same time period were SaaS, Marketing & Advertising, and Ecommerce & Trading. Interestingly, despite the fact that SaaS saw a significant drop in the number of rounds, the actual value of investment increased by almost €0.5B. This is perhaps reflective of a wider trend throughout 2017, in which there were fewer, but much larger, early stage rounds (especially in the UK).

A key focus will always be on the top investment firms, looking at what areas the ‘smart money’ is betting on. These firms are mainly focusing on the sectors in similar proportions to the rest of investment market, such as Deep Tech and Fintech. Interestingly, top investors are shying away from manufacturing, healthcare, and marketing sectors, relative to the overall market, and are instead turning their attentions to Marketplace, AI, and SaaS sectors. Those 3 are likely to be the ones to watch in the coming year.


Despite strong growth from within Europe, North America remains the world leader in nearly every quantifiable metric when it comes to investments in companies. According to Tom Ciccolella, Partner, US Ventures Leader at PwC “2017 was the second biggest year of investments ($71.9B) for venture-backed US startup firms, increasing 17% over 2016.”

There were a record number (109) of ‘Mega rounds’ (totalling $100m+) in the US last year, beating this previous record in 2015 (107). These mega-rounds were the principal driving factor behind the massive growth seen in 2017, accounting for 36% of total funding for the year. The largest ‘mega rounds’, mainly taking place in later stage round funding, were Lyft ($1B and $500m), Magic Leap ($502m), and OneWeb ($500m).

2017 also saw the birth of 22 new VC-backed ‘unicorns’ in the US, which represents a 57% increase on 2016, but still not able to match the heights of the ‘unicorn craze’ in 2014 and 2015. The private companies reaching the magic $1bn valuation figure in 2017 included Affirm, Duo Security, and Squarespace.

What are the popular US Sectors? Internet and Healthcare delivered the largest numbers in 2017, with $6.5B and $4B invested respectively, and the number of deals in the Internet sector totalling 491. Healthcare saw a large amount of growth in 2017, becoming the 2nd highest ranked sector in terms of deal share, knocking Mobile and Telecoms down into 3rd. This growth in the Healthcare sector also matches up with the European scene.

AI is currently hot topic in global conversation, and in the US it was no different. When compared to 2016, the total annual AI funding increased 28% in 2017, with $5B across 444 deals. The main source of 2017 investments came in Q4’2017, with impressive funding rounds from Lemonade ($120M Series C), Uptake Technologies ($117M Series D), and Petuum ($93M Series B).

Other sectors also saw strong results in 2017. This year was a record year for Cybersecurity funding, with total investments exceeding $3.6B. This funding total also contained a record number (7) of mega-rounds. The year’s largest deals were for Skybox Security ($150m) , Duo Security ($70m), and Feedzai ($50m). 2017 was also a good year for the Genomics sector, with companies receiving record funding total of $2.5B. The honour of largest deals for 2017 went to GRAIL ($238m), Counsyl ($80m), and Personal Genome Diagnostics ($65m).

The major trends, for this year and next

A record-breaking 2017 across the globe was driven by latestage ‘mega rounds’ and an 11% increase in deal activity. We also saw corporations and their CVCs participating in 25%+ of deals in 2017, with Q4’17 seeing that number hit 28%, an 8-quarter high, showing that they are willing to get more involved with investment deals globally. Healthcare, Fintech, Deep Tech, and Mobile Telecoms were the sectors that saw large growth and massive capital investments. Europe, driven by the UK; and Asia, driven by China, saw plenty of encouragement as they attempt to to emulate the levels of VC investment seen in the US. The one to watch in the coming year, if anyone wasn’t already, will be AI technologies, which is set for another massive year of global investment growth.


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