Welcome!

News Feed Item

Venture Capital Investing Reaches Highest Level Since Q4 2000 With $13.0 Billion Invested During Q2 2014, According to the MoneyTree Report

Software Continues to Dominate VC Investing; MoneyTree Reports Largest Ever Quarterly Investment of $1.2 Billion in Q2

WASHINGTON, DC--(Marketwired - July 18, 2014) - Venture capitalists invested $13.0 billion in 1,114 deals in the second 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 34 percent in terms of dollars and 13 percent in the number of deals, compared to the first quarter when $9.7 billion was invested in 985 deals. The total dollars invested in Q2 2014 marks the largest quarterly investment total since $13.1 billion was invested in Q1 2001. VC investments for the first half of 2014 reached $22.7 billion, the highest first half total since 2001.

Dollars invested in the Software industry experienced another significant increase in Q2 2014, reaching $6.1 billion, which marks only the fourth time since 1995 that investments in Software companies have exceeded $6 billion in a single quarter. The large quarterly total is due in large part to half of the 10 largest deals of the quarter falling into the Software industry, including a $1.2 billion deal, the largest single quarterly deal reported by the MoneyTree Report in the history of the report, which began in 1995.

"Investments going into companies with disruptive technologies remained strong in the second quarter, and VC investing is on pace to exceed the $30 billion invested in 2013," remarked Mark McCaffrey, global software leader and technology partner at PwC. "When we step back, we not only see technology as a megatrend impacting the way we live, but it's also disrupting entire industries by bringing the suppliers even closer to consumers. And, as the value of this technology is undeniable, we see VCs as well as non-traditional investors pursuing these deals more aggressively, resulting in higher valuations and larger capital investments. We're also seeing a shift in the risk profile from the risk of adoption of the technology to the risk in investing in a segment where companies are fiercely battling for market share and the market leader is yet to be determined."

"Not since the early 2000s have we witnessed this level of quarterly investment activity. Despite being over $15 billion below the peak, you can't ignore the historical significance of venture investment during the second quarter," said Bobby Franklin, President and CEO of NVCA. "Before alarmists declare a repeat of the dot-com bubble, it's important to keep in mind that a lot of this activity was driven by a handful of eye-popping investment rounds, including a record-setting funding round of $1.2 billion. Additionally, we hear anecdotally from members about the emergence of new investors in the innovation economy, including the rise of hedge funds, mutual funds and other non-traditional investors making direct investments into presumably pre-IPO companies." 

Industry Analysis

The Software industry received the highest level of funding of all industries, rising 50 percent from the prior quarter to $6.1 billion invested during the second quarter of 2014. The Software industry also counted the most deals in Q2 at 454, a 7 percent increase from the prior quarter. Part of the dramatic increase in investing can be attributed to the largest deal of the quarter going to a software company. The $1.2 billion Expansion stage investment in a transportation software company is the largest deal of the quarter as well as the single largest quarterly investment recorded by the MoneyTree Report since it began reporting on venture capital investing in 1995.

The Biotechnology industry was the second largest sector for dollars invested with $1.8 billion going into 122 deals, rising 69 percent in dollars and 7 percent in deals from the prior quarter. The increase in dollars invested can be at least partially attributed to two large Later stage funding rounds totaling nearly $320 million. The Medical Devices and Equipment industry also experienced an increase in dollars and deals compared to the first quarter, rising 8 percent in dollars and 12 percent in deals in Q2, to $649 million in 73 deals.

The Media & Entertainment industry captured the third largest total in Q2 with $1.0 billion flowing into 124 deals. This represented a 40 percent increase in dollars and a 9 percent increase in deals compared to the prior quarter. The increase in dollars invested can be partially attributed to a large deal, the fifth largest in the quarter.

Nine of the 17 MoneyTree industries experienced decreases in dollars invested in the second quarter, including Business Products and Services (69 percent decrease), Telecommunications (43 percent decrease), and Semiconductors (29 percent decrease).

Venture capitalists invested $2.7 billion into 270 Internet-specific companies during the second quarter of 2014. This investment level is 18 percent higher in dollars and 20 percent larger in deals than the first quarter of 2014 when $2.3 billion went into 225 deals. Two of the top eleven 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 rose 46 percent in dollars and 20 percent in deals with $189 million invested into 55 deals in the second quarter. Early stage investments rose 17 percent in dollars and 9 percent in deals with $3.8 billion going into 522 deals. Seed/Early stage deals accounted for 52 percent of total deal volume in Q2, compared to 53 percent in the prior quarter. The average Seed deal in the second quarter was $3.4 million, up from $2.8 million in the first quarter of 2014. The average Early stage deal was $7.3 million in Q2, up from $6.8 million in the prior quarter. 

Expansion stage dollars rose 53 percent in the second quarter, with $5.7 billion going into 308 deals. Overall, Expansion stage deals accounted for 28 percent of venture deals in Q2, up slightly from 27 percent in the first quarter of 2014. The average Expansion stage deal was $18.7 million, up dramatically from $14.0 million in Q1 2014, due in part to the largest deal of the quarter falling into the expansion stage of development.

Investments in Later stage deals increased 25 percent in dollars and 19 percent in deals to $3.2 billion going into 229 rounds in the second quarter. Later stage deals accounted for 21 percent of total deal volume in Q2, up slightly from 20 percent in the prior quarter when $2.6 billion went into 193 deals. The average Later stage deal in the second quarter was $14.0 million, up from $13.3 million in the prior quarter.

First-Time Financings

First-time financing (companies receiving venture capital for the first time) dollars increased 48 percent to $1.9 billion in Q2, while the number of companies rose 20 percent from the prior quarter to 351. First-time financings accounted for 14 percent of all dollars in Q2 while first-time deals accounted for 32 percent of all deals in the second quarter.

Of the companies receiving venture capital for the first time in Q2, Software companies captured the largest share and accounted for 40 percent of the dollars and 44 percent of the deals with 155 companies capturing $743 million. First-time financings in the Life Sciences sector rose 3 percent in dollars from the prior quarter with $267 million going into 32 companies, compared with 38 such companies receiving $261 million in Q1. The average first-time deal in the second quarter was $5.3 million, a jump from $4.3 million in the prior quarter. Seed/Early stage companies received the bulk of first-time investments, capturing 57 percent of the dollars and 75 percent of the deals in the second 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. Venture capital firms invested $13.0 billion during Q2 2014, according to the MoneyTree report

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. As the voice of the U.S. venture capital community, the National Venture Capital Association 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, the 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.

Contacts
Clare Chachere
PwC US
512-867-8737
[email protected]

Jeffrey Davidson
Brainerd Communicators for PwC
212-739-6733
[email protected]

Ben Veghte
NVCA
703-778-9292
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
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, will share examples from a wide range of industries – includin...
"We build IoT infrastructure products - when you have to integrate different devices, different systems and cloud you have to build an application to do that but we eliminate the need to build an application. Our products can integrate any device, any system, any cloud regardless of protocol," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor – all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
Get deep visibility into the performance of your databases and expert advice for performance optimization and tuning. You can't get application performance without database performance. Give everyone on the team a comprehensive view of how every aspect of the system affects performance across SQL database operations, host server and OS, virtualization resources and storage I/O. Quickly find bottlenecks and troubleshoot complex problems.
Internet of @ThingsExpo has announced today that Chris Matthieu has been named tech chair of Internet of @ThingsExpo 2017 New York The 7th Internet of @ThingsExpo will take place on June 6-8, 2017, at the Javits Center in New York City, New York. Chris Matthieu is the co-founder and CTO of Octoblu, a revolutionary real-time IoT platform recently acquired by Citrix. Octoblu connects things, systems, people and clouds to a global mesh network allowing users to automate and control design flo...
"We are an all-flash array storage provider but our focus has been on VM-aware storage specifically for virtualized applications," stated Dhiraj Sehgal of Tintri in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
With 15% of enterprises adopting a hybrid IT strategy, you need to set a plan to integrate hybrid cloud throughout your infrastructure. In his session at 18th Cloud Expo, Steven Dreher, Director of Solutions Architecture at Green House Data, discussed how to plan for shifting resource requirements, overcome challenges, and implement hybrid IT alongside your existing data center assets. Highlights included anticipating workload, cost and resource calculations, integrating services on both sides...
Unless your company can spend a lot of money on new technology, re-engineering your environment and hiring a comprehensive cybersecurity team, you will most likely move to the cloud or seek external service partnerships. In his session at 18th Cloud Expo, Darren Guccione, CEO of Keeper Security, revealed what you need to know when it comes to encryption in the cloud.
"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.
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
"We are the public cloud providers. We are currently providing 50% of the resources they need for doing e-commerce business in China and we are hosting about 60% of mobile gaming in China," explained Yi Zheng, CPO and VP of Engineering at CDS Global Cloud, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
Between 2005 and 2020, data volumes will grow by a factor of 300 – enough data to stack CDs from the earth to the moon 162 times. This has come to be known as the ‘big data’ phenomenon. Unfortunately, traditional approaches to handling, storing and analyzing data aren’t adequate at this scale: they’re too costly, slow and physically cumbersome to keep up. Fortunately, in response a new breed of technology has emerged that is cheaper, faster and more scalable. Yet, in meeting these new needs they...
When it comes to cloud computing, the ability to turn massive amounts of compute cores on and off on demand sounds attractive to IT staff, who need to manage peaks and valleys in user activity. With cloud bursting, the majority of the data can stay on premises while tapping into compute from public cloud providers, reducing risk and minimizing need to move large files. In his session at 18th Cloud Expo, Scott Jeschonek, Director of Product Management at Avere Systems, discussed the IT and busin...
In his general session at 19th Cloud Expo, Manish Dixit, VP of Product and Engineering at Dice, discussed how Dice leverages data insights and tools to help both tech professionals and recruiters better understand how skills relate to each other and which skills are in high demand using interactive visualizations and salary indicator tools to maximize earning potential. Manish Dixit is VP of Product and Engineering at Dice. As the leader of the Product, Engineering and Data Sciences team at D...