Which Silicon Valley start-ups are attracting the smart venture capital?

Venture capital firms are behind the big-money deals funding some of the most exciting start-ups coming out of Silicon Valley and other hotbeds of innovation. So what’s capturing the attention and dollars of investment gurus at firms like Andreessen Horowitz, Sequoia Capital, New Enterprise Associates, and Kleiner Perkins Caufield Byers?

Survey the biggest funding deals made in 2016 by these four firms, as recorded by the start-up and venture capital (VC) investment database Crunchbase, and it reveals the continued importance of digital technologies, especially those that take advantage of the consumer shift to mobile-first commerce.

In terms of sheer dollar size, it is very hard to go past the massive $1.8 billion Series F funding round for Snap Inc, which is the company behind social media app of the moment Snapchat. Thirteen investors took part in the funding round, including Sequoia Capital, with the potential to monetise the social media app’s relationship with its youthful demographic cited as a key factor for investors.

The VC firms in this brief survey did not necessarily lead the investment deals detailed below. However, the spread and size of deals gives a good overview of the directions in which venture capital money is moving. Many of the deals featured here are Series B, C, D, and beyond rounds, which in investment parlance means the companies being funded are generally at ‘optimise’, ‘build’, or ‘scale’ stages of development. These companies are the unicorns-in-waiting of Silicon Valley and beyond.

Another slice of eBay’s pie

Andreessen Horowitz is home to two of the biggest names in venture capital, Marc Andreessen and Ben Horowitz. The Silicon Valley-based firm has $2.7 billion under management and invests in funding deals from seed to growth. Its list of investments over the past decade or two is a who’s who of social media and internet-related big hitters, including eBay, Skype, Airbnb and Facebook to name a few.

In 2016, Andreessen Horowitz’s five biggest investment deals were:

1. Mobile-first online auctions site OfferUp, US$119 million Series C round
2. Cloud-based 3D CAD system Onshape, US$105 million Series D round
3. Fintech loans start-up Affirm,US$100 million Series D round
4. Anti-fraud acoustic tech start-up Pindrop, US$80.8 million Series C round
5. Data centre operating system Mesosphere, US$73.5 million Series C round

Key takeaway OfferUp is the type of mobile-first marketplace site that could further eat into auction site giant eBay’s market share.

Snapchat’s war chest grows

Founded by Don Valentine in 1972, Sequoia Capital is one of Silicon Valley’s elder statesmen when it comes to venture capital. It has been estimated that over the years the firm has invested in companies that are now worth in the vicinity of $1.4 trillion in public market valuation. Its investments have included some of the absolute titans of tech, such as Google, Apple and Oracle.

In 2016, Sequoia Capital’s five biggest investment deals were for:

1. Parent company of Snapchat app, Snap Inc, US$1.8 billion Series F round
2. Indonesian-based transport and courier start-up Go-Jek, US$550 million private equity round
3. China-based last-mile logistics app Dada, US$300 million Series D round
4. End-to-end development platform maker Unity Technologies, US$181 million Series C round
5. Health insurance app Clover Health, US$160 million Series C round

Key takeaway Snapchat’s massive funding round will continue to make Mark Zuckerberg and his team nervous.

It reveals the continued importance of digital technologies, especially those that take advantage of the consumer shift to mobile-first commerce.”

Fresh juice and fertility all the go

Like Sequoia Capital, Kleiner Perkins Caufield & Byers has been part of the Silicon Valley investment scene since the sunrise days of the 1970s. The firm’s longevity means it was there at the start to invest in internet and tech mainstays such as Amazon, AOL, Electronic Arts and Google. In recent years, its investments have also focused on the burgeoning biotech and clean energy markets,as well as internet and e-commerce based plays.

In 2016, KPC’s five biggest investment deals were for:

1. Local business delivery service DoorDash, US$127 million Series C round
2. Cloud-based personal data storage app UpThere,US$77 million venture round
3. Consumer cold-pressed juicing machine maker Juicero, US$70 million Series B round
4. Multi-mode travel search engine GoEuro, US$70 million Series C round
5. Fertility health tech start-up Progyny, US$67.8 million Series B round

Key takeaway The health and biotech markets continue to attract big money as quality of life becomes a major issue for ageing baby boomers.

Estate agents beware

New Enterprise Associates is another of the venerable Menlo Park-based investment firms that keeps Silicon Valley liquid with the funds necessary to keep the innovation cauldron bubbling. Established in 1977, NEA has made its name investing in areas such as software, biotechnology and mobile, with distinct interests in medical and pharmaceutical developments.

In 2016, NEA’s five biggest investment deals were for:

1. Online home-selling service Open Door, US$210 million Series D round
2. Cloud-based 3D CAD system Onshape, US$105 million Series D round
3. Variable price car insurer Metromile, US$103.1 million Series D round
4. Mobile marketplace app Letgo, US$100 million Series B round
5. Medical device company CVRx, US$93 million Series G round

Key takeaway: Platform models like Open Door take the Uber model into areas like real estate, disrupting industries as they go.