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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The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
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