Welcome!

News Feed Item

Venture Capital Dollars Invested In Q1 2014 Reaches Highest Quarterly Total Since Q2 2001, According To The MoneyTree Report

Dollars Invested in Software Companies Reaches $4 Billion for the First Time Since Q4 2000

WASHINGTON, April 18, 2014 /PRNewswire/ -- Venture capitalists invested $9.5 billion in 951 deals in the first quarter of 2014, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters.  Quarterly venture capital (VC) investment activity rose 12 percent in terms of dollars but fell 14 percent in the number of deals, compared to the fourth quarter of 2013 when $8.4 billion was invested in 1,112 deals.

PwC logo

Dollars invested in the Software industry experienced another significant increase in Q1 2014, capturing $4.0 billion and further distancing it by more than three times from the second largest industry, Biotechnology. The last time Software investments reached this level was in Q4 2000. Venture capital investments into Software companies accounted for 42 percent of total dollars and 44 percent of total deals in the first quarter.  Five of the top 10 largest deals for the quarter were Software companies.

"Context is everything, and when you consider the context behind the numbers, you start to understand why there was a shift in the first quarter of 2014.  Seed and early stage financing numbers are down from the previous quarter, but expansion stage dollars invested are up 34 percent.  This was to be expected when you consider the domination by seed and early stage deals in 2012 and 2013," said Bobby Franklin, President and CEO of NVCA.  "Because these companies are now moving to the next stage of their maturing process, the investment rounds tend to be bigger, which explains why the numbers are trending toward the later stages of the investment calendar.  To be sure, the spring thaw of the exit markets is providing some firms with new life, but overall capital remains constrained for most venture capital firms." 

"Investments into the Software sector continue to remain healthy as investors look for companies with disruptive technology that challenges the norm," remarked Mark McCaffrey, global software leader and technology partner at PwC.  "These companies are attracting significant funding from venture capitalists and non-traditional investors alike as their business models continue to provide real value across all sectors and get access to global markets.  Clearly, the heightened interest is driving healthy valuations which could meet with some volatility.  However, barring any significant macroeconomic event, we expect a strong level of investing to continue as these models meet customer needs and deliver value to the stakeholders."

Industry Analysis

The Software industry received the highest level of funding of all industries, rising 39 percent from the prior quarter to $4.0 billion invested during the first quarter of 2014.  The Software industry also counted the most deals in Q1 at 414, approximately the same level seen in the prior quarter when 409 rounds were completed. 

The Biotechnology industry was the second largest sector for dollars invested with $1.1 billion going into 112 deals, falling 23 percent in dollars and 21 percent in deals from the prior quarter. The Medical Devices and Equipment industry also experienced a decline in volume, dropping 37 percent to 61 deals in Q1, while the dollars invested rose 28 percent to $588 million.  Overall, investments in Q1 in the Life Sciences sector (Biotechnology and Medical Devices) fell 10 percent in dollars and 28 percent in deals when compared to Q4 2013.

The IT Services industry captured the third largest total in Q1 with $816 million flowing into 59 deals.  This represented a 33 percent increase in dollars invested compared to the prior quarter and can be primarily attributed to the largest deal of the quarter, a $325 million investment, going to a company in the IT services industry.

Nine of the 17 MoneyTree industries experienced decreases in dollars invested in the first quarter, including Telecommunications (68 percent decrease), Networking & Equipment (47 percent decrease), and Semiconductors (17 percent decrease).

Venture capitalists invested $2.3 billion into 219 Internet-specific companies during the first quarter of 2014.  This investment level is 5 percent lower in dollars and 20 percent lower in deals than the fourth quarter of 2013 when $2.4 billion went into 273 deals.   Four of the top ten deals for the quarter were in the Internet-specific category.  'Internet-Specific' is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company's primary industry category.

Stage of Development

Seed stage investments fell 64 percent in dollars and 41 percent in deals with $125 million invested into 41 deals in the first quarter. Early stage investments fell 3 percent in dollars and 18 percent in deals with $2.9 billion going into 451 deals.  Seed/Early stage deals accounted for 52 percent of total deal volume in Q1, compared to 55 percent in the fourth quarter of 2013.  The average Seed deal in the first quarter was $3.0 million, down from $5.0 million in the fourth quarter of 2013.  The average Early stage deal was $6.4 million in Q1, up from $5.4 million in the prior quarter. 

Expansion stage dollars rose 34 percent in the first quarter, with $3.9 billion going into 274 deals.  Overall, Expansion stage deals accounted for 29 percent of venture deals in the first quarter, up from 26 percent in the fourth quarter of 2013.  The average Expansion stage deal was $14.3 million, up dramatically from $10.3 million in Q4 2013.

Investments in Later stage deals increased 15 percent in dollars but declined 12 percent in deals to $2.5 billion going into 185 rounds in the first quarter.  Later stage deals accounted for 19 percent of total deal volume in Q1, identical to the prior quarter when $2.2 billion went into 211 deals.  The average Later stage deal in the first quarter was $13.8 million, up from $10.5 million in the prior quarter.

First-Time Financings

First-time financing (companies receiving venture capital for the first time) dollars decreased 25 percent to $1.2 billion in Q1, while the number of companies fell 24 percent from the prior quarter to 271.  First-time financings accounted for 13 percent of all dollars in Q1, which is the lowest percentage total in the history of the survey.  Companies receiving VC funding for the first time in Q1 accounted for 28 percent of all deals, which is the lowest percentage total since Q3 2009.

Nearly half of the dollars invested into companies receiving venture capital for the first time in Q1 were in the Software industry, accounting for 48 percent of the dollars and 46 percent of the deals with 126 companies capturing $571 million.  First-time financings in the Life Sciences sector fell 38 percent in dollars from the prior quarter to $258 million going into 36 companies.  The average first-time deal in the first quarter was $4.4 million, approximately the same as the prior quarter.  Seed/Early stage companies received the bulk of first-time investments, capturing 78 percent of the dollars and 82 percent of the deals in the first quarter of 2014.

MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org.

Note to the Editor

Information included in this release or related venture capital investment data should be cited in the following way:  "The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters" or "PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters." After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA or MoneyTree Report. Charts and tables displaying the data are sourced to "PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters." After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA, MoneyTree Report or MoneyTree.

About the PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report

The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S.  It is based on data provided by Thomson Reuters. The survey includes the investment activity of professional venture capital firms with or without a U.S. office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments, in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies.

The survey excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as roll-ups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing.

Investee companies must be domiciled in one of the 50 U.S. states or DC even if substantial portions of their activities are outside the United States.

Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies.  Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings.

About the National Venture Capital Association

Venture capitalists are committed to funding America's most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. According to a 2011 Global Insight study, venture-backed companies accounted for 12 million jobs and $3.1 trillion in revenue in the United States in 2010. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community's preeminent trade association, NVCA serves as the definitive resource for venture capital data and unites its nearly 400 members through a full range of professional services. For more information about the NVCA, please visit www.nvca.org.

The PwC Private Equity & Venture Capital Practice is part of the Global Technology Industry Group, www.pwcglobaltech.com. The group is comprised of industry professionals who deliver a broad spectrum of services to meet the needs of fast-growth technology start-ups and agile, global giants in key industry segments: networking & computers, software & Internet, semiconductors, life sciences and private equity & venture capital.  PwC is a recognized leader in each industry segment with services for technology clients in all stages of growth.

About PwC US

PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 184,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US. Gain customized access to our insights by downloading our thought leadership app: PwC's 365™ Advancing business thinking every day.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 2014 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC US refers to the US member firm, and PwC may refer to either the PwC network of firms or the US member firm. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

About Thomson Reuters

Thomson Reuters is a leading source of information for businesses and professionals.   Through a wide range of products and services, Thomson Reuters helps clients make better decisions, be more productive and achieve superior results. Thomson Reuters has headquarters in New York and employs more than 50,000 people worldwide.

Logo - http://photos.prnewswire.com/prnh/20100917/NY66894LOGO

SOURCE PwC US

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that App2Cloud will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct. 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. App2Cloud is an online Platform, specializing in migrating legacy applications to any Cloud Providers (AWS, Azure, Google Cloud).
The goal of Continuous Testing is to shift testing left to find defects earlier and release software faster. This can be achieved by integrating a set of open source functional and performance testing tools in the early stages of your software delivery lifecycle. There is one process that binds all application delivery stages together into one well-orchestrated machine: Continuous Testing. Continuous Testing is the conveyer belt between the Software Factory and production stages. Artifacts are m...
When shopping for a new data processing platform for IoT solutions, many development teams want to be able to test-drive options before making a choice. Yet when evaluating an IoT solution, it’s simply not feasible to do so at scale with physical devices. Building a sensor simulator is the next best choice; however, generating a realistic simulation at very high TPS with ease of configurability is a formidable challenge. When dealing with multiple application or transport protocols, you would be...
Cloud resources, although available in abundance, are inherently volatile. For transactional computing, like ERP and most enterprise software, this is a challenge as transactional integrity and data fidelity is paramount – making it a challenge to create cloud native applications while relying on RDBMS. In his session at 21st Cloud Expo, Claus Jepsen, Chief Architect and Head of Innovation Labs at Unit4, will explore that in order to create distributed and scalable solutions ensuring high availa...
An increasing number of companies are creating products that combine data with analytical capabilities. Running interactive queries on Big Data requires complex architectures to store and query data effectively, typically involving data streams, an choosing efficient file format/database and multiple independent systems that are tied together through custom-engineered pipelines. In his session at @BigDataExpo at @ThingsExpo, Tomer Levi, a senior software engineer at Intel’s Advanced Analytics ...
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, shared examples from a wide range of industries – including en...
In IT, we sometimes coin terms for things before we know exactly what they are and how they’ll be used. The resulting terms may capture a common set of aspirations and goals – as “cloud” did broadly for on-demand, self-service, and flexible computing. But such a term can also lump together diverse and even competing practices, technologies, and priorities to the point where important distinctions are glossed over and lost.
Detecting internal user threats in the Big Data eco-system is challenging and cumbersome. Many organizations monitor internal usage of the Big Data eco-system using a set of alerts. This is not a scalable process given the increase in the number of alerts with the accelerating growth in data volume and user base. Organizations are increasingly leveraging machine learning to monitor only those data elements that are sensitive and critical, autonomously establish monitoring policies, and to detect...
"We're a cybersecurity firm that specializes in engineering security solutions both at the software and hardware level. Security cannot be an after-the-fact afterthought, which is what it's become," stated Richard Blech, Chief Executive Officer at Secure Channels, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Most companies are adopting or evaluating container technology - Docker in particular - to speed up application deployment, drive down cost, ease management and make application delivery more flexible overall. As with most new architectures, this dream takes a lot of work to become a reality. Even when you do get your application componentized enough and packaged properly, there are still challenges for DevOps teams to making the shift to continuous delivery and achieving that reduction in cost ...
Enterprise architects are increasingly adopting multi-cloud strategies as they seek to utilize existing data center assets, leverage the advantages of cloud computing and avoid cloud vendor lock-in. This requires a globally aware traffic management strategy that can monitor infrastructure health across data centers and end-user experience globally, while responding to control changes and system specification at the speed of today’s DevOps teams. In his session at 20th Cloud Expo, Josh Gray, Chie...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. Jack Norris reviews best practices to show how companies develop, deploy, and dynamically update these applications and how this data-first...
Intelligent Automation is now one of the key business imperatives for CIOs and CISOs impacting all areas of business today. In his session at 21st Cloud Expo, Brian Boeggeman, VP Alliances & Partnerships at Ayehu, will talk about how business value is created and delivered through intelligent automation to today’s enterprises. The open ecosystem platform approach toward Intelligent Automation that Ayehu delivers to the market is core to enabling the creation of the self-driving enterprise.
"At the keynote this morning we spoke about the value proposition of Nutanix, of having a DevOps culture and a mindset, and the business outcomes of achieving agility and scale, which everybody here is trying to accomplish," noted Mark Lavi, DevOps Solution Architect at Nutanix, in this SYS-CON.tv interview at @DevOpsSummit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We're here to tell the world about our cloud-scale infrastructure that we have at Juniper combined with the world-class security that we put into the cloud," explained Lisa Guess, VP of Systems Engineering at Juniper Networks, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.