Tech companies are staying private for longer, and a big driver of that is the available financing in private markets especially in later stage rounds. The number of investors in later rounds have increased dramatically as well. While historically, late stage tech investing was the territory of the aptly named late-stage VC or growth equity firm or the odd tech focused private equity firm, today, we have mutual funds, hedge funds, sovereign wealth funds and corporations all jumping into the late stages as well.
We used CB Insights data to quantify just how large this late stage tech boom is by looking at the investors in Series D+, Growth Equity, Private Equity, and Corporate Minority rounds into tech companies.
On a pure volume basis, the data highlights a huge increase since 2010 in just the absolute number of late stage deals. In 2010, there were less than 400 compared to more than 950 in 2014. The zeitgeist around unicorns has driven a 160% increase in these late stage rounds. The biggest jump as the graph below illustrates was between 2013 and 2014, which saw a 42% yoy increase.
Mega-financings or deals where $100M+ is invested have also increased, with more than 300 happening in 2014 compared to fewer than 70 in 2010, a 394% increase. These well-heeled hedge funds, mutual funds, etc are not just investing in greater numbers but are willing to put a lot of money to work when they do.
The number of investors that want a piece of the late-stage, wannabe unicorn action is also increasing as the graph below illustrates. 2014 saw a huge jump in the number of active investors in late stage tech deals after otherwise linear growth, zooming past the the 1100 mark in 2014. The number of investors in late stage rounds was 72% higher than the number in 2010.
The number of investors in $100M+ late stage tech deals more than doubled in 2014 as more firms with deep pockets drove money into tech. The push into late stage rounds also pulls some investors into this segment of investing who are not otherwise familiar with it – for example, Rakuten’s uncharacteristic large investment in Lyft recently.
When we isolate the investors that are a part of late stage deals above $100M, the table is full of mutual funds, hedge funds, and some other unusual suspects. A handful of VCs pop into this list but most of these firms are not the major contributors to these rounds but firms exercising and hoping to maintain ownership levels in companies they invested in much earlier.
T. Rowe Price, Tiger Global, and Digital Sky Technologies take the top 3 spots since 2010. International investors, especially from Asia, are also more prominent in large deals, with the appearance of Tencent, Softbank Corp, GIC Special Investments, and Temasek holdings as well as DST.
|1||T. Rowe Price|
|2||Tiger Global Management|
|3||Digital Sky Technologies|
|4||Kleiner Perkins Caufield & Byers|
|9||GIC Special Investments|
|10||Insight Venture Partners|
|10||Institutional Venture Partners|
|10||New Enterprise Associates|
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Explosion image source: Wikimedia