Medical Technology M&A Pulse – 2016 Year in Review

The value of total venture capital investments across all 20 industries as classified by PWC totaled $58.6 billion in 2016, a -20% decrease compared to 2015. When examining sector specific investment levels, the most active segments in 2016 were technology related industries such as internet and mobile and telecommunication. Internet, which includes e-commerce and other revenue generating websites, received $22.0 billion, representing 38% of all venture capital dollars invested in 2016. Mobile and telecommunications, which accounted for 23% of venture capital dollars invested in 2016, received $13.5 billion.

Venture capital investment represents an alternative asset class that is not correlated to market returns, and as such, the total number of investments made is not the best proxy to monitor changes in investor sentiment. Changes in investment dollars, however, provide a clearer picture as to directional trends. In relation to 2015, 2016 saw venture capital dollars invested in later stage companies decrease -35% ($20.9 billion invested), followed by early stage and expansion stage, with -14% ($10.0 billion invested) and -13% ($20.4 billion invested) decreases, respectively. Seed stage investments also showed a decrease in 2016, declining -5% ($1.9 billion invested).

The median pre-money valuation of different stages of venture development is another useful metric to assess investor sentiment. In 2016, series D+ investments declined from $306 million in 2015 to $264 million in 2016, a -14% decrease.

Sectors that enjoyed an uptick in VC investment in 2016 included retail and automotive & transportation, increasing by 51% and 26%, respectively. Conversely, total dollars invested in environmental services & equipment, industrials, and risk & security decreased -65% per sector.

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