Dip, But No Slowdown in First-Quarter VC Funding, & Top 10 Deals

A new MoneyTree Report being released today shows that U.S. venture capital activity eased off during the first three months of 2015. Yet it still marked the fifth consecutive quarter in which U.S. venture funding remained above $10 billion.

VCs invested $13.4 billion in 1,020 deals throughout the U.S. during the first quarter of 2015, according to the MoneyTree Report. Funding was down 10 percent from the $14.9 billion that VCs invested during the previous quarter, according to MoneyTree. The deal count likewise declined by almost 8 percent from the fourth quarter of 2014, when MoneyTree counted 1,103 deals.

Yet the investment level in the recent quarter still was about 26 percent higher than the first quarter of 2014, when VCs invested more than $10.6 billion in 1,030 deals, according to MoneyTree.

While venture investing is typically lower in the first quarter than the rest of the year, “This was still a robust, big quarter,” said Tom Ciccolella, who works with venture firms in San Jose, CA, as the U.S. Venture Capital Leader for the PwC accounting firm. “You’d have to go back to 2000 to find a first quarter that was bigger.”

One explanation for the continuing surge is that investments in late-stage deals increased by 50 percent, with $4.2 billion going into 207 companies, marking the biggest quarter for dollars invested in later stage companies since the fourth quarter of 2000. Four of the biggest 10 deals in the quarter were late-stage investments. (Our list of the top 10 deals is below.)

“We saw 12 [venture] deals over $100 million, including two $1 billion investments in Q1, continuing the megadeal trend,” Ciccolella said.

Another reason is that hedge funds and other types of private equity investors have been joining later-stage, venture-backed deals. “The money that VCs have been putting into these companies has not changed appreciably since 2007,” according to John Taylor, who heads research at the NVCA. Traditional venture capital firms have been investing at a rate that ranges from $7 billion to $8 billion a quarter, Taylor said.

Investment levels above that are

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Author: Bruce V. Bigelow

In Memoriam: Our dear friend Bruce V. Bigelow passed away on June 29, 2018. He was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Bruce Bigelow joined Xconomy from the business desk of the San Diego Union-Tribune. He was a member of the team of reporters who were awarded the 2006 Pulitzer Prize in National Reporting for uncovering bribes paid to San Diego Republican Rep. Randy “Duke” Cunningham in exchange for special legislation earmarks. He also shared a 2006 award for enterprise reporting from the Society of Business Editors and Writers for “In Harm’s Way,” an article about the extraordinary casualty rate among employees working in Iraq for San Diego’s Titan Corp. He has written extensively about the 2002 corporate accounting scandal at software goliath Peregrine Systems. He also was a Gerald Loeb Award finalist and National Headline Award winner for “The Toymaker,” a 14-part chronicle of a San Diego start-up company. He takes special satisfaction, though, that the series was included in the library for nonfiction narrative journalism at the Nieman Foundation for Journalism at Harvard University. Bigelow graduated from U.C. Berkeley in 1977 with a degree in English Literature and from the Columbia University Graduate School of Journalism in 1979. Before joining the Union-Tribune in 1990, he worked for the Associated Press in Los Angeles and The Kansas City Times.