WASHINGTON
DC – Venture capitalists invested $17.5 billion in 1,189 deals in the second
quarter of 2015, the first time since the fourth quarter of 2000 that VC
investing has exceeded $17 Billion. Software companies captured $7.3 Billion of
this total, the highest ever recorded.
So says the MoneyTree
Report from PricewaterhouseCoopers LLP and the National Venture Capital
Association, based on data provided by Thomson Reuters. Quarterly venture
capital investment increased 30 percent
in terms of dollars and 13 percent in the number of deals, compared to the
first quarter when $13.5 billion was invested in 1,048 deals. The second
quarter is the sixth consecutive quarter of more than $10 billion of venture
capital invested in a single quarter.
In Michigan
during the second quarter, 18 deals were done that generated $46,165,300,
compared to 11 deals in the second quarter of 2014 that drew $114,850,400 in VC
investments.
“In addition
to a significant uptick in total investing in Q2, the $7.3 billion invested in
Software companies exceeded the total VC dollars invested across all industries
in 51 of the last 82 quarters,” said Tom Ciccolella, US Venture Capital Leader
at PwC. “We saw 26 megadeals (deals $100 million or greater) in Q2,
including yet another billion dollar investment. After seeing the very first
billion dollar VC investment in Q1 of last year, we now count four of the last
five quarters with companies receiving billion dollar investments, adding to
the ever-growing herd of unicorns which is approaching triple digits. Given the
current pace of investing, VC in 2015 is on track to well exceed the $50
billion invested in all of 2014.”
Driven by a
strengthening fundraising environment, the venture ecosystem deployed more
capital to the innovation economy in the second quarter than any period in the
last fifteen years, said Bobby Franklin, President and CEO of NVCA.
“While this
uptick can be partly attributed to non-traditional investors joining funding
rounds, venture continues to lead the way in deploying capital to the most
promising new technologies and companies,” he said. “With software
companies continuing to disrupt entrenched industries and in some cases
creating new industries all together, venture investment into the sector
increased 30 percent from the first quarter to $7.3 billion, marking the
highest total investment into software companies since the inception of the
MoneyTree Report in 1995. As valuations increase and more and more
companies choose to stay private longer, we are likely to see software’s share
of total venture investment continue to rise.”
Industry
Analysis
The Software
industry continued to receive the highest level of funding of all industries,
increasing 30 percent from the prior quarter to $7.3 billion in Q2 2015. This
amount is the largest quarterly investment total going into Software companies
since the inception of the MoneyTree Report in Q1 1995. The number of deals
also increased to 491, an 11 percent increase compared to the first quarter and
the highest quarterly deal count since Q3 2000.
The Media
& Entertainment industry was the second largest industry for dollars
invested with $2.7 billion going into 118 deals, an increase of 127 percent in
dollars and a 34 percent rise in total number of deals. The majority of this
increased can be attributed to the largest deal of the quarter falling into the
Media & Entertainment industry.
The
Biotechnology industry captured the third largest total for dollars invested in
Q2 but was second in terms of number of deals with $2.3 billion going into 126
deals, a 32 percent increase in dollars invested but flat in number of deals
compared to the prior quarter. This amount is the largest quarterly investment
total going into Biotechnology companies since the inception of the MoneyTree
Report in Q1 1995. Overall, investments in Q2 in the Life Sciences sector
(Biotechnology and Medical Devices combined) accounted for $3.1 billion going
into 201 deals, a 41 percent increase in dollars and flat in deals when
compared to Q1 2015.
Ten of the
17 MoneyTree industries experienced increases in dollars invested in the second
quarter, including Consumer Products & Services (129 percent increase),
Media and Entertainment (127 percent increase), Medical Devices & Equipment
(71 percent increase), and Financial Services (17 percent increase).
Venture
capitalists invested $5.0 billion into 290 Internet-specific companies during
the second quarter of 2015. This investment level represents a 64 percent
increase in dollars and a 25 percent rise in deals compared to the first
quarter of 2015 when $3.1 billion went into 232 companies. “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
investment was up 85 percent in dollars and 81 percent in deals with $169
million invested into 47 deals in the second quarter. Early stage investment
was up 58 percent in dollars and 16 percent in deals with $5.8 billion going
into 593 deals. Seed/Early stage deals accounted for 54 percent of total deal
volume in Q2, compared to 51 percent in the prior quarter. The average Seed
stage deal in the second quarter was $3.6 million, up from $3.5 million in the
first quarter of 2015. The average Early stage deal was $9.8 million in Q2, up
from $7.2 million in the prior quarter.
Expansion
stage investment was up 38 percent in dollars and 12 percent in the number of
deals in Q2, with $7.3 billion going into 328 deals. Overall, Expansion stage
deals accounted for 28 percent of venture deals in Q2. The average Expansion
stage deal was $22.5 million, up from $18.2 million in Q1 2015.
Investments
in Later stage companies fell 5 percent to $4.2 billion going into 221 deals in
the second quarter. Later stage deals accounted for 19 percent of total deal
volume in Q2, down slightly from the prior quarter. The average Later stage
deal in the second quarter was $18.8 million, down from $20.2 million in the
prior quarter.
First-Time
Financings
First-time
financing (companies receiving venture capital for the first time) dollars
increased 43 percent to $2.6 billion in Q2 while the number of deals was up 18
percent from the prior quarter, rising to 373. First-time financings accounted
for 15 percent of all dollars and 31 percent of all deals in the second
quarter.
Of the
companies receiving venture capital funding for the first time in Q2, Software
companies captured the largest share and accounted for 38 percent of the
dollars and 44 percent of the deals with 163 companies capturing $1.0 billion.
This is the largest amount invested in Software companies receiving VC for the
first time since Q4 2000. First-time financings in the Life Sciences sector
more than doubled from the prior quarter with $858 million going into 44
companies, compared with the same number of companies receiving $412 million in
Q1 2015.
The average
first-time deal in the second quarter was $7.0 million, up from $5.8 million in
the prior quarter. Seed/Early stage companies received the bulk of first-time
investments, capturing 55 percent of the dollars and 83 percent of the deals in
the second quarter of 2015.
MoneyTree
Report results are available online at www.pwcmoneytree.comand www.nvca.org.
