Full year and fourth quarter National Venture Capital Association reports are out for 2015. (NVCA Reports) At the start of the cycle, the raising of venture funds, $28 billion was raised in 2015 for 235 funds, $5 billion in the fourth quarter, where 20 raises were for new funds and 26 were follow-ons. The 2015 total compares to $31 billion raised in 2014 for 271 funds. Next, investing by venture funds, for the year 2015 $59 billion was invested compared to $51 billion in 2014, with roughly the same number of total deals in each year. Software got the bulk of the funds, with biotech a distant second. For the fourth quarter $11 billion went into 962 deals compared with $16 billion in Q4 2014 and $17 billion in 1149 fundings in Q3 2015. So funding activity is slowing year-over-year and quarter-to-quarter.
Now the exits, which are critical to maintaining the cycle. There were 77 IPOs in 2015 with a value of $9.4 billion compared to 117 with a value of $15.5 billion in 2014. For the fourth quarter, there were 16 IPOs, versus 15 in Q3 2015. There was limited non-biotech health care activity in the fourth quarter. In regard to mergers and acquisition activity, 372 venture-backed firms were acquired in 2015 compared to 485 in 2014 and the value of the subset of announced deals was $16.3 billion in 2015 versus over $20 billion in 2014. And in the fourth quarter M & A transactions declined to 91 from 109 in the third quarter. While things slowed at the end of 2015, they have screeched to a halt in 2016 so far. As I write this, there has not been a single IPO in 2016 and the health care M & A market also appears slow. Slowing economies and down markets, however, often provide a better valuation environment for venture capital firms, so we might see a “healthy” pace of investments. But the venture investing cycle drives a lot of economic activity and when it slows, it both reflects and contributes to a slowing general economy.