VC Liquidity Report 2017

VC-backed exits recorded another strong year of exit activity with $67.3 billion exited across 1,265 deals. While exits over $100 million comprised just over a third of total exit counts, these transactions make up 88.7% of total exit value.
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exit VC backed exit European VC backed North American European IPO Company
VC Liquidity 
Report
Sponsored by
2017 Annual
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Contents
Key takeaways
3
Overview
4
Though VC exits have slowed, overall exit value 
remains historically high
Size & Sector
7
Acquisitions
8
Buyouts
9
IPOs
10
Alternative exit opportunities
11
$67.3B
$45.7B
114
2017 North American & 
European VC-backed  
exit value
Key takeaways from the analysts
3rd straight year of growth
Exit value accounted for by 
acquisitions, which declined 
in count by 15.4%
Number of IPOs in 2017, a 
30% year-over-year increase
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methodologies
21% YoY
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
3 
• VC-backed exits recorded another 
strong year of exit activity with $67.3 
billion exited across 1,265 deals. While 
exits over $100 million comprised just 
over a third of total exit counts, these 
transactions make up 88.7% of total 
exit value.
• Acquisitions declined for the third 
consecutive year in 2017, resting 
at $45.7 billion. PE sponsors have 
become a prominent third source of 
liquidity for VCs, as buyouts shot up to 
18.5% of all exits in 2017.
• Initial public offerings of VC-backed 
companies increased 203% in value 
and 30% in count over 2016. High 
demand for tech offerings amid a 
strong public market paved the way 
for six tech IPOs raising more than 
$500 million each.
Sponsored by
Overview
VC-backed exits recorded another 
strong year of activity with $67.3 billion 
exited across 1,265 deals. Although 
this is the third straight year of falling 
exit counts, this activity represents a 
slight increase of exit value over the two 
previous years. The maturing venture 
environment across North America and 
Europe, combined with consistently 
generous valuations in the market, have 
contributed to the proliferation of larger 
exits. While exits over $100 million 
comprised just over a third of total exit 
counts, these transactions make up 
88.7% of total exit value. Due to the 
inherent nature of VC, larger deals have 
always had an outsized effect on exit 
value, but the relationship continues to 
become more pronounced.  
$22.5$18.6$38.8$41.9$61.6$52.3$96.3$64.4$66.3$67.3744
686
1,003
1,090
1,262
1,308
1,644 1,576
1,360
1,265
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Exit Value ($B)
# of Exits Closed
Exit counts have declined for three straight years
North American and European VC-backed exit activity
Though VC exits have slowed, overall 
exit value remains historically high
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Source: PitchBook
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
4 
Sponsored by
OVERVIEW
Source: PitchBook
Source: PitchBook
At the top end of the market, 2017 
was a rebound year for exits of highly 
valued companies. The number of 
exits that eclipsed $1 billion was in 
line with the last four years, but an 
open IPO window for large companies 
brought the number of unicorn-valued 
companies exiting to a decade-high 
of 24. This even surpasses the tally in 
2014, which held the decade-record for 
unicorn exits, as well as aggregate exit 
count and value. After 2017 began with 
skepticism surrounding the IPO market 
and unicorn exits, this serves as a 
victory for the VC community. Perhaps 
more important is that this trend is a 
positive signal for the capacity of the 
exit environment to accommodate 
outsized exits. 
The ability for the broader exit market 
to continue accommodating outsized 
exits becomes more important as the 
inventory of VC-backed aging unicorns 
swells—18 current unicorns achieved 
their $1 billion+ valuation at least four 
years ago. This phenomenon has also 
allowed the large, mature VC-backed 
businesses to delay exits far past the 
normal VC timeline. Alternative exit 
options like direct secondary sales 
should continue to gain popularity 
in the coming year to combat this 
“private-for-longer” strategy, allowing 
early investors and employees to 
achieve liquidity by selling into new 
funding rounds or structured secondary 
sales. The recent $9 billion SoftBank 
investment into Uber is an extremely 
large-scale example of this type of 
transaction, providing liquidity to some 
of the earliest backers, as well as Uber’s 
founder Travis Kalanick.  
Quarterly exit value has occurred at a relatively steady 
pace since 2013
North American & European VC-backed exit activity
13
24
45
72
0
10
20
30
40
50
60
70
80
90
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
$1B+ Valued Exits
$1B+ Valued VC Deals
The number of $1B+ deals has far outpaced the 
number of $1B+ exits 
North American & European $1B+ deal and exit activity (#)
$10.7$10.7$13.1$17.8$17.4$14.6$21.7$42.6$13.0$13.6$17.8$19.9$17.4$19.3$18.1$11.5$20.9$16.9$14.6$15.00
50
100
150
200
250
300
350
400
450
500
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2013
2014
2015
2016
2017
Exit Value ($B)
# of Exits Closed
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
5 
Sponsored by
OVERVIEW
$18.4$16.4$32.5$35.6$57.8$39.1$81.3$51.1$53.4$56.2517 507
742
794
925
940
1,134
1,068
917
866
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Exit Value ($B)
# of Exits Closed
$4.1$2.2$6.3$6.3$3.8$13.2$14.9$13.3$12.8$11.0227
179
261
296
337
368
510
508
443
399
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Exit Value ($B)
# of Exits Closed
Exit count has fallen 24% over the past 
three years in North America
North American VC-backed exit activity
European exit activity has seen both exit 
count and exit value decline
European VC-backed exit activity
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Acquisi�on
IPO
Buyout
Buyouts have continued to show strength 
as an exit opportunity
North American & European VC-backed exit activity (#) 
by type
$0
$20
$40
$60
$80
$100
$120
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Acquisi�on
IPO
Buyout
Backed by a strong public market, IPOs 
showed resilience in 2017
North American & European VC-backed exit activity ($B) 
by type
Source: PitchBook
Source: PitchBook
Source: PitchBook
Source: PitchBook
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
6 
Sponsored by
Size & Sector
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008200920102011201220132014201520162017HC Devices &
Supplies
HC Services &
Systems
Pharma &
Biotech
Other
So�ware
Media
IT Hardware
Energy
Consumer Goods
& Recrea�on
Commercial
Services
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008200920102011201220132014201520162017HC Devices &
Supplies
HC Services &
Systems
Pharma &
Biotech
Other
So�ware
Media
IT Hardware
Energy
Consumer Goods
& Recrea�on
Commercial
Services
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008200920102011201220132014201520162017$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008200920102011201220132014201520162017$500M+
$100M-
$500M
$50M-
$100M
$25M-
$50M
Under
$25M
Software has continued to dominate VC-
backed exits
North American & European VC-backed exit activity (#) 
by sector
Software overtakes pharma & biotech for 
majority of deal value in 2017
North American & European VC-backed exit activity ($) 
by sector
Growing number of larger exits completed 
in 2017
North American & European VC-backed exit activity (#) 
by size
Exits greater than $500M continue to 
make up more than 50% of exit value 
North American & European VC-backed exit activity ($) 
by size
Source: PitchBook
Source: PitchBook
Source: PitchBook
Source: PitchBook
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
7 
Sponsored by
Acquisitions
Acquisitions declined for the third 
consecutive year in 2017, as exit count 
slid 15.4% and value decreased 21% 
from 2016, resting at $45.7 billion. 
With 3,538 acquisitions of VC-backed 
companies completed between 2014 
and 2016, 2017’s decline in acquisition 
count may be a product of corporations 
focusing on integrating new companies 
into their operations and fostering 
their growth. Additionally, it has 
become costlier than ever to complete 
acquisitions, as valuations of venture-
backed companies reach new heights. 
Some acquirers could be waiting for 
more favorable prices before ramping 
up activity. 
Despite a minor decrease in deal count, 
tech acquisitions continue to constitute 
a dominant portion of activity, with 
51.8% of 2017 acquisitions made in the 
software sector. Tech acquisitions are 
an efficient alternative to internal R&D, 
as “old economy” corporations look 
to keep up with changing markets by 
incorporating tech innovations into their 
businesses. John Deere’s acquisition 
of Blue River Technology serves as an 
example of this dynamic. Blue River’s 
autonomous agricultural robots utilize 
artificial intelligence to differentiate 
weeds from other plants and efficiently 
distribute pesticides only where 
necessary, cutting costs and minimizing 
chemical presence in soil. 
0
200
400
600
800
1,000
1,200
1,400
$0
$10
$20
$30
$40
$50
$60
$70
$80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Acquisi�on Value ($B)
Acquisi�on Count
Acquisitions have declined by 25% over the past few 
years
North American & European VC-backed acquisition activity
79.7%
72.5%
65%
70%
75%
80%
85%
90%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
While still the most common exit route, acquisitions 
have fallen as a proportion of total VC exits
Acquisition percentage of total North American & European VC-backed 
exits
Source: PitchBook
Source: PitchBook
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
8 
Sponsored by
Buyouts
PE sponsors have become a prominent 
third source of liquidity for VCs, 
as buyouts shot up to 18.5% of all 
completed exits in 2017 and nearly 
doubled in value to $8.1 billion. This 
dynamic may be attributed to a 
few factors. As venture-backed 
companies have chosen to stay private 
longer and mature their businesses, 
PE investors have a relatively new 
pipeline of appropriately mature and 
scalable venture-backed companies. 
Additionally, sponsors have embraced 
the predictable annual recurring 
revenue models of SaaS companies 
that fit nicely into the traditional LBO 
model. Buyouts may also be favorable 
to founders, as they can circumvent 
the arduous alternative of operating as 
a public company in favor of staying 
private. 
Providence Equity Partners has been 
particularly active in software buyouts, 
with 48 deals completed since 2015. 
Its $200 million buyout of digital 
advertising startup DoubleVerify 
illustrates the synergies between buyer 
and seller, as Providence Equity’s 
insights in growing into the increasingly 
data-based media and advertising 
industry aim to contribute to the 
company’s customer adoption. At the 
same time, DoubleVerify’s ad-verifying 
and fraud-protection technology 
positions the company to tap into a 
significant market opportunity, as 
digital ad integrity has become highly 
relevant in the last year. 
0
50
100
150
200
250
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Buyout Value ($B)
Buyout Count
Buyouts becoming a more popular route to exit 
for VC-backed companies
North American & European buyout activity
13.8%
18.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
As companies continue growth longer in the 
private market, buyouts likely to increase
Buyout percentage of total North American & European VC-backed 
exits
Source: PitchBook
Source: PitchBook
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
9 
Sponsored by
IPOs
0
50
100
150
200
250
$0
$5
$10
$15
$20
$25
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
IPO Value ($B)
IPO Count
After a down year in 2016, IPOs 
rebounded somewhat in 2017
North American & European VC-backed IPO activity
Amid a strong public market 
environment, 2017 enjoyed a healthy 
uptick in IPOs. With over $13.5 billion 
raised across 114 offerings, IPOs of 
venture-backed companies increased 
30% in count and 203% in value from 
the previous year. Demand for large 
tech offerings materialized in 2017, 
paving the way for six outsized tech 
IPOs raising more than $500 million 
each. While these exits made up just 
5% of IPO count, they constituted over 
48% of total IPO deal value. The growth 
we’ve seen in venture valuations have 
no doubt contributed to larger exits. 
Median time to IPO from most recent 
financing round increased to 1.4 years in 
2017, and median years from founding 
to exit remained at a high point of 9.5 
years. At the same time, median pre-
IPO valuation reached $167.6 million, 
a 39% increase from 2016. As these 
highly valued and well-developed late-
stage startups take their companies 
public, there has been a growing share 
of outsized liquidity events. Although 
these large exits provide early investors 
with strong returns, backers closer to 
the exit may not receive substantial 
gains, as growth and value appreciation 
slow for larger, more mature companies. 
Snap (NYSE: SNAP), for instance, saw 
a massive appreciation in its valuation 
from its Series A round to Series F 
round after four years of rapid growth. 
However, its IPO valuation depreciated 
from the valuation received during 
its Series F round amid reports of 
decelerated user growth and similar 
product offerings from competitors. 
Looking forward, 2018’s IPO prospects 
appear strong, but volatility may 
serve to deter startups. The pipeline 
of mature late-stage companies 
has continuously grown, and 2017 
saw 53 startups gain unicorn status. 
Additionally, two highly valued tech 
companies (Xiaomi, Dropbox) have 
reportedly begun the filing process, 
and buzz about other speculated 
IPOs abounds. However, the return of 
volatility in the public market represents 
a potential headwind that could 
dissuade startups from going public. 
Source: PitchBook
$13.5B
capital raised by VC-backed IPOs 
during 2017
Over $13.5 billion raised 
across 114 IPOs during 
2017, a 203% YoY 
increase in value and 
30% YoY increase in 
count
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
10 
Sponsored by
Alternative exit 
opportunities
2017 brought a host of alternative VC 
exit options to the forefront, with IPO 
fees centered in the crosshairs. Social 
Capital and Hedosophia partnered 
to form and IPO a special purpose 
acquisition company (SPAC) specifically 
to execute a reverse merger of a 
technology company valued over $1 
billion. While the SPAC structure is not 
new, the focus on a technology unicorn 
is unique, and we have already seen 
another technology-focused SPAC list 
in 2018. The Social Capital Hedosophia 
team claims that since investors in the 
SPAC’s IPO are betting on the SPAC 
management team, these investors 
would have a much longer-term focus 
as opposed to traditional public market 
investors. However, this is somewhat 
contradicted by SPAC investors’ rights 
to redeem their shares once the 
acquisition has been announced. 
Another highly anticipated alternative 
exit is Spotify’s pursuit of a direct 
listing. This unconventional transaction 
will not raise any new capital and 
will be completed without formal 
underwriting support from investment 
banks. We believe this approach has 
more potential disruptive power on the 
traditional IPO process than the SPAC 
approach, as Spotify is only contracting 
a group of three advisors and paying 
them a flat fee. Spotify’s size and 
seemingly increased bargaining power 
in relation to investment banking 
services will make its direct listing of 
interest to the other large late-stage 
companies that have postponed IPOs 
over the last couple of years. Many 
questions remain about a direct listing 
of this size, notably around the early 
pricing and volatility. With no formal 
underwriting support or lockup periods, 
supply and demand at the initial listing 
have the potential to be significantly 
mismatched and cause some early 
fluctuations. However, the presence of 
the three banks advising the process 
and Spotify’s mature internal finance 
function should leave the company 
well-equipped for most potential 
scenarios.    
While innovating around the IPO 
process is admirable, we view operation 
as a public company as a larger pain 
point to venture-backed companies 
than the process itself. We believe VC-
backed companies are more concerned 
with avoiding quarterly reporting 
requirements and the short-termism 
and scrutiny of public investors than 
the upfront cost of an IPO. Though 
the arduous and costly IPO process 
may have slowed some activity, it 
is not insurmountable, as 2017 still 
represented a robust year of VC-backed 
IPO activity across North America and 
Europe, especially for large companies. 
4.9 
5.3 
8.2 
6.4 
0
1
2
3
4
5
6
7
8
9
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Acquisi�on/Buyout
IPO
SPACs have received relatively little hype, but could 
play important role in unicorn exits moving forward
Median time (years) from first financings to exit by type
Source: PitchBook
PITCHBOOK 2017 ANNUAL VC LIQUIDITY REPORT
11 
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