John Taylor, director of research for the NVCA.
Taylor noted that the top 10 deals in the MoneyTree Report together accounted for $2.6 billion in deployed capital—or roughly 20 percent of the $13 billion invested during the quarter. The single biggest deal on the list was the $1.2 billion financing for San Francisco-based Uber, which also ranked as the single largest quarterly investment since the MoneyTree Report began reporting on venture capital investing in 1995.
Take away the top 10 mega deals, Taylor said, “and it looks pretty much like business as usual.”
A related factor, Taylor said, is a surge in investments by hedge funds, private equity firms, mutual funds, and other non-traditional venture investors. For example, the private equity firm TPG led the $450 million investment round in Airbnb.
In past years, the MoneyTree Report only counted investments made by traditional venture investors, Taylor said. But investments by international hedge funds in Facebook’s venture rounds challenged MoneyTree researchers to change their thinking, Taylor said. MoneyTree now includes non-traditional investments in venture rounds, as long as the deals were led by traditional venture firms.
Late-stage rounds for companies like Uber, Lyft, and Pinterest have been attracting non-traditional investors because of their substantial upside potential, according to Jeff Crowe, a managing partner in the Palo Alto, CA, office of Norwest Venture Partners. “Any time interest rates stay at 1 or 2 percent for a long time, investors in all asset classes start looking for higher rates of return,” Crowe said.
“You’re seeing even public investors saying that these companies are transformational,” Crowe explained. They are disrupting existing industries, such as the taxi and hotel industry, by introducing
