Time Between Rounds: Analysis of Different Geographies and Deal Sizes

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Understanding the amount of time that passes between funding rounds is a critical component in the
financial planning of all those involved in a start-up and its life-cycle. Over the last decade, the funding
landscape has changed dramatically with more deals, greater variety of investors, larger amounts
and higher valuations. Accordingly, the time between rounds has changed, and there is enough data
today to examine some interesting viewpoints on this subject.
Israeli-based high-tech data research company IVC, in cooperation with American-based Crunchbase,
aims to present a better understanding of the timing between rounds in light of two notable key
factors in the last years: the geographic locations of the companies, and the volume of the capital
raised (please check the methodology section for more details).
Nowadays, funding available to companies across different locations seems to be more robust than
ever. However, the median numbers for raising series A round funding after a seed round, tell a
different story: for US and Canadian companies, it takes approximately a year and three months to
get the next funding injection, whereas for companies in the Euro-region and Israel it takes a year
and five months and a year and nine months, respectively.

Time Between Rounds: Analysis of Different Geographies and Deal Sizes / IVC Research Powered by Crunchbase / September 16, 2019
Median numbers for the different locations become similar in later rounds, evidence that the local
ecosystem is less critical for funding in series B and up (a fact that is well known in the Israeli market).
Interestingly, in Israel and the US, over time, the effect is the opposite: as a company advances in the
lifecycle of funding rounds, it become easier to find more capital for Israeli companies, while it takes
longer in the US and Canada.
The density estimation, which estimates the likelihood that an event will occur in a specific
timeframe, shows that most of funding occurs from nine months to two years, for all funding types,
across all geographies. However, the “long tail”’ of those occurrences, could be much longer relative
to this timeline. For the purpose of visualization, the X scale measures up to 6 years, but some funding
rounds took much longer than that, without regard to the funding type or location.

Large rounds take less time

Adding another layer of data points and analyzing elapsed time with respect to locations and
amounts, the dissimilarity among investor behavior, location and funding type, should be more
obvious.
However, while raising large amounts <would> seem more demanding and time consuming, the
median elapsed years between rounds proves otherwise. Raising large amounts— in the group of
amounts in the higher end of the observation set (for more details about the exact numbers for each
level see the Methodology section)—does not take longer than small or medium size deals; in fact, it
takes less time.
The median numbers are very convincing for the US based companies. While in series A and B, raising
large amount won’t take longer than smaller amounts, in later rounds—where “big money” rounds
are more common—it is apparent that large amounts equal less time between rounds. In other
locations, this observation is less clear is several cases, yet raising large amounts, undoubtedly, does
not add in terms of time.

Time Between Rounds: Analysis of Different Geographies and Deal Sizes / IVC Research Powered by Crunchbase / September 16, 2019
This behavior can be explained by the financial mechanism of the tech market. The larger amounts
at stake in later rounds come from a different kind of investor. While VCs do participate in large
rounds, more often we find traditional PE funds of all sizes and Growth funds aiming to finance more
mature start-ups.
In these larger deals, the picture is different on either side of the table. Mature companies already
have financial operation data to show potential investors and are able to manage expectations, which
helps to reach investment decisions. On the other end, the investor community seems to be more
efficient when addressing late stage financing rounds involving large amounts, maybe because of
FOMO.
Interestingly, in both Israel and the Euro-region, a change in elapsed time before large rounds was
noticed in the period 2015–2016. Investors’ appetite for large rounds grew enough from that point
on to make these larger financial deals more common and easier to achieve.

Methodology
The data for activity in the US/Canada and the Euro-region is from Crunchbase DB and the data about Israel
is from IVC DB. The investment data are from 2010 – Sep 2019.
In this paper we examined around 60,000 financing rounds from the US and Canada, involving 14,000
companies that resulted in nearly 11,000 data points about the time ranges between rounds. In the Euro-
region, we found nearly 18,000 financing rounds from different countries in West/North/East and Central
Europe, of 3,500 companies that manifested into 2,100 time ranges between rounds. In Israel, the data
included 8,000 financing rounds that resulted in 2,300 time ranges of 1,800 companies.
The analysis took into account the most common round types: seed, series A, series B, series C and series D.
From a technical point of view: we used Kernel Density estimation to supply an estimation for the probability
density function in order to get a full picture of the likelihood for different time periods between different
rounds.
Besides measuring the time differentiation between specific round types, the analysis also looked at the
timing while also taking into consideration the round types and the amounts (divided into tertiles – 3 equal
groups of the observation set).
The ranges of the observations set are presented in the table below:

Time Between Rounds: Analysis of Different Geographies and Deal Sizes / IVC Research Powered by Crunchbase / September 16, 2019
 Small Range ($m)* High Range ($m)** Geo Series
$ 3.80 $ 8.00 US A
$ 8.20 $ 17.60 US B
$ 13.00 $ 30.00 US C
$ 16.00 $ 40.00 US D
$ 2.00 $ 5.00 Israel A
$ 4.28 $ 12.00 Israel B
$ 7.57 $ 19.66 Israel C
$ 10.00 $ 22.92 Israel D
$ 2.49 $ 5.67 Euro A
$ 5.45 $ 14.50 Euro B
$ 10.00 $ 24.80 Euro C
$ 16.57 $ 34.17 Euro D

* The Small Range is lower than this amount.

** The Large Range data set in larger than this amount.

***Medium range is between the Small and the High ranges for each Series.

Time Between Rounds: Analysis of Different Geographies and Deal Sizes / IVC Research Powered by Crunchbase / September 16, 2019