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Venture Activity in Q1 2015

By April 23, 2015Commentary

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.

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