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Rainy day for smaller startups.
EASING UP

If you want venture investment in 2017, you should be big or successful already

By Michael J. Coren

Venture capitalists have gotten pickier even as they continue to pour billions of dollars into promising startups.

There were 279 funding deals in the Bay Area in the first three months of 2017, down 52% from a recent peak during the second quarter of 2015, and the lowest quarterly number since the end of 2010, according to PitchBook and the National Venture Capital Association on April 5.

Yet the total amount of money deployed has remained relatively stable as Silicon Valley investors place fewer but bigger bets. In the first quarter of 2017, investors deployed $5.1 billion total, with $1.9 billion going to three companies—Airbnb, SoFi, and Instacart—alone.

The trend mirrors national numbers. Overall, venture investors in the US put $16.5 billion into 1,797 startups in the first quarter of 2017, the lowest number since the final quarter of 2011, according to the PitchBook and the National Venture Capital Association. Their report suggested the decline was “a return to more rational investment levels” rather than a broader retrenchment.