Venture Funding and Exits in the Fourth Quarter and 2014

As we have previously observed, innovation in health care, particularly on the product side, is heavily dependent on venture funding, and on the cycle of successful exits that generates capital for new investments.  2014 was an excellent year for venture finance, according to recently released stats from the National Venture Capital Association.   (NVCA Reports)  In the fourth quarter, venture funds raised $5.6 billion and for all of 2014, $29.8 billion was raised, up 69% from 2013.  There were 96 new funds and 158 follow-on ones.  On the exit side, there were 27 venture-backed IPOs during the fourth quarter that raised $4.4 billion and for the full year there were 115 such offerings which garnered $15.3 billion.  The number of IPOs was up from 81 in 2013 and the amount raised rose from $ 11.1 billion.  16 of these IPOs in the fourth quarter were in health care, raising $1.7 billion.   There were also 95 venture-backed M & A exits, of which 29 reported an aggregate deal value of $26.4 billion, although this is sharply skewed by Facebook’s absurd $19.5 billion purchase of Whatsapp.  The full year saw 455 acquisitions of venture-backed firms, with 132 reporting a total value of $46 billion.  The comparable 2013 numbers were 393 deals with 95 reporting transaction values of $16.9 billion.  Health care in the fourth quarter accounted for 10 of these deals, with 7 of them reporting a total value of $2.7 billion.  Of reported deals in the fourth quarter, 5 of 29 returned less than was invested, 6 were at 1-4X, 11 were at 4-10X and 7 were over ten times investment.  The financing and exit markets appear to be in good health heading into 2015.