Amid talk of a bubble, the private market continues to thrive.
Venture capital funding this year has already exceeded the amount that was raised in all of 2014.
Startups have banked $98.4 billion in 2015 — and there are still three months left to go. Last year, companies brought in $88.7 billion.
That’s according to a new report from CB Insights and KPMG, released on Wednesday, which looks at venture capital funding in the third quarter of 2015.
“There’s just so much money available right now,” said Anand Sanwal, CEO and cofounder of CB Insights.
The number of mega-rounds — or those worth more than $100 million — has risen 125% from one year ago. There are also a lot more unicorns, or firms valued at $1 billion or more. In fact, 23 new firms achieved this valuation in the third quarter of 2015.
What are the other trends in global startups? Here’s what you need to know.
Funding to early-stage companies is slowing.
The percent of capital going to young startups has declined — yet again. Seed-stage rounds and angel investments have dropped for the fourth consecutive quarter. They now make up just 28% of all deals.
This is partly due to the fact that big venture capital firms have shifted to mid- and later-stage rounds. The size of early-stage deals is also increasing — which means that investors have to cut bigger checks much sooner in the process.
There are, of course, two sides to every penny. Earlier this week, AngelList announced a $400 million seed fund. But Sanwal said this doesn’t mean it’s the start of a new trend.
“We’ve been noticing this decline over time,” said Sanwal. “[However], it is still way above what it was four or five years ago.”
The “rich” are getting richer.
The number of deals is declining, while the check sizes are climbing. This quarter actually saw the lowest number of deals since the first quarter of 2012. The 12 largest rounds of funding — to companies like Uber, Palantir, GitHub, Vox, FanDuel and Fanatics — totaled more than 28% of the total funding in North America in Q3.
“A lot of money is trying to chase these outsized returns and these hot companies,” said Sanwal.
VC-rich companies just aren’t exiting like they used to.
Companies are staying private longer.
“That’s not the best scenario,” said Sanwal. “Unlike past years, there’s actually more money flowing in then there is leaving via exits.”
Companies are raising increasingly more money in the private market in these mega-rounds — dubbed private IPOs. That’s one reason that more companies keep joining the unicorn club.
“Eventually these late-stage unicorns will have to exit — and exit via IPO is what they’re looking for,” said Sanwal.
But the lack of exits could also be contributing to the slowdown of early-stage funding. More exits could mean that investors would have more money to reinvest in early-stage companies.
Investors are hot on Asia, but staying conservative.
Asia has eclipsed the European market in terms of number of deals and funding amounts, making it the second biggest market behind the U.S.
But while there have been 60 mega-rounds, including Uber competitor Didi Kuaidi, investors are becoming more conservative with deals.
Funding to China-based firms is up 315% compared to the third quarter of last year. But that’s not because there are more deals being made. There’s only one more funding deal than a year ago — which means the rounds are significantly larger.
Healthcare and fintech are getting hotter.
They don’t account for the vast majority of deals at the moment, but companies working on healthcare and financial tech are seen as having the most room for innovation.
Companies like ZocDoc and Clover Health both work to streamline healthcare systems and banked mega-rounds this quarter. Meanwhile, biotech firms Immunocore and Stemcentrx, which both work to combat cancer, also announced mega-rounds.
Companies in the fintech space have also had some mega-rounds recently. But with startups tackling everything from banking to real estate to loans, the report noted that “the sheer size of the market makes it an industry ripe for disrupting.”