2014 was a good year for venture firms, lots of fundraising, lots of investing, lots of exits. So how did 2015 start out? A National Venture Capital Association report provides some answers. (NVCA Report) Starting at the front end, venture capital firms raised $7 billion in 61 funds in the first quarter, a 30% decrease in committed funds from the first quarter of 2014, and a 15% decrease in the number of funds. 44 of the funds were follow-ons and 18 were new. The largest new fund was for $200 million and the largest follow-on was $1.6 billion. Moving along in the process, investing by funds remained strong although down from the 4th quarter of 2014, but up 26% in dollar terms from the comparable year-ago period. Overall, $13.4 billion was invested in 1020 transactions. In the fourth quarter of 2014, $14.9 billion was invested in 1103 deals. Life sciences was the second largest industry sector, with $2.2 billion in 193 transactions. Health care services investing, while relatively small, was up 141%. As might be expected, expansion and late-stage companies accounted for the bulk of the funding. Finally, completing the cycle are exits, primarily via IPOs and M & A activity. There were 17 venture-backed IPOs in the first quarter, raising $1.4 billion, a 54% decrease in the number of offerings and 58% decrease in dollar value compared to the year-earlier purpose. This was the lowest level of activity by quarter since the first quarter in 2013. There were 86 venture-backed M & A transactions with an aggregate announced value in 16 deals of $2.1 billion. These numbers were also the lowest since Q1 2013. There are significant numbers of venture-backed firms in the IPO process. It is to be expected after such high levels of activity throughout the venture investing cycle that there might be a bit of a breather. But in many ways investing and exit activity shows signs of speculative excess, so this may be a forewarning of more serious and lasting slowdowns.
