A trend toward super-sized initial financings is attracting a new set of deep-pocketed investors to the early stage space. These new players are making earlier commitments with hopes of guaranteeing larger ownership positions at an IPO, particularly in companies that could have multibillion dollar market cap potential.
Venture rounds in general have been breaking the $100 million barrier with some regularity since at least 2000. But until 2014 it was rare to see a series A round of that size.
Already this year there have been seven series A rounds of $100 million or more. The tally since 2014 stands at 19 (see “Figure: $100M and Up”).
$100 million-plus series A rounds began to take off in 2014. Already this year, seven companies have raised a total of $1.3 billion in A rounds of $100 million or more each. The chart shows the total number of $100 million-plus rounds each year and the aggregate raised in those rounds. Data include tranched and untranched rounds. Source: BCIQ: BioCentury Online Intelligence
Eight companies have disclosed the structure of their rounds. Four were untranched.
At least 10 traditional early stage VCs have invested in one or more of these giant rounds. These VCs, who typically remain the largest stakeholders, say large rounds that attract crossover investors can provide an accelerated path to a liquidity event.
The new players include crossover investors and family offices. They typically are not taking an active role on boards. Rather, their participation serves as a signal that they