Given global economic uncertainty and subsequent stock market volatility, it is not surprising that the latest reports on venture capital activity from the National Venture Capital Association reflect a slowdown. (NVCA Reports) In the first quarter of 2016, there were 969 funding rounds with $12.1 billion invested, compared to just under $145 billion in around 1075 fundings in the first quarter of 2015. Sequentially, the amount invested was flat compared to Q4 2015, and the number of deals was down from 1021. In addition, a few deals acquired for more of the total invested, with ten transactions covering 25% of the total. Software had the highest level of funding at $5.1 billion, biotech was second at $1.8 billion and medical devices about $500 million. Seed investing declined by 10% and early stage by 18%, from Q1 2016 compared to Q4 2015. First-time financings declined by 31% and the average investment in a first-time round was $5.7 million, down from $6.9 million in the prior quarter. Expansion stage investment increased 25% and later stage by 10%.
On the other hand, fundraising was fairly strong, with about $12 billion raised in 57 funds, almost double the amount in the fourth quarter, and up substantially from the first quarter of 2015. Exit activity, however, was fairly slow, particularly since the IPO opportunity has virtually shut down. There were only 6 IPOs in the quarter, which raised around $575 million, but there were 79 mergers or acquisitions involving venture-backed companies. The IPO number was down from 17 in the year-earlier quarter and the number of M & A transactions was down from 97 in that quarter. They were also down compared to 16 IPOs and 105 transactions in the fourth quarter of 2015. All the IPOs in the first quarter of 2016 involved life sciences companies. Most of the M & A deals involved information technology. Early signs in the second quarter are that venture activity continues to slow and that exit activity is low. A more vigorous market may await more certainty regarding the US and world economy.