Skip to main content

NVCA Data on Financing of Private Companies

By January 22, 2015Commentary

Last week we covered the National Venture Capital Association’s data on funds raised by venture capital groups and on exits of venture-backed firms.  This week we address the data on amounts invested into private companies by venture funds.   (NVCA Release)   The ability of venture funds to raise new money and to generate successful exits to help access that new capital is important, but the most important aspect of the venture cycle is how much money is getting to private, hopefully innovative, companies.  And 2014 generally looked good in that regard.  For 2014 a total of $48.3 billion was invested in 4356 deals, with $14.8 billion of that being invested in the fourth quarter in 1109 transactions.  The 2014 numbers were 61% better than 2013’s in terms of dollars and 4% larger in number of deals.  2014’s dollars invested is somewhat skewed by 2 deals of over $1 billion and 40 deals over $100 million, all exceptionally large investments by venture standards.

By stage, later stage deals, the most mature companies, accounted for $12 billion of the total in 2014, up 35% from 2013, in 843 deals, which was up 6%; and the average size was $14.3 million, up from $11.2 million.  Expansion stage transactions were at $19.8 billion, up 102%, in 1156 fundings, up 13%; average size was $17.1 million against $9.6 million a year earlier.  Early stage firms got $15.8 billion, a 54% increase, in 2165 deals, essentially flat; with an average size of $7.3 million, up from $4.8 million.  Seed financings were only $719 million, down 29% from the year earlier, in 192 deals, which was an 18% decrease.  This is the lowest number of seed financings since 2002.  This is the one warning sign in the report, since you need a fair number of companies coming into the early stage end of the funnel to get successful ones at the other end.

In terms of sectors, Internet companies scored $11.9 billion and software overall got $19.8 billion in 1799 transactions, or 41% of total dollars, proving that the hype isn’t over yet.  For health care services, the numbers were a lowly $360 million in 50 deals, but this was a “healthy” increase from 2013’s $211 million in 45 financings.  Biotech received $6 billion, up 29%, but in only 470 transactions, which was down 4%.  And medical device got $2.6 billion in 319 financings.  All-in-all a good situation for companies looking for capital to grow their businesses.

Leave a comment