Welcome!

Cognitive Computing Authors: Lori MacVittie, Elizabeth White, Dana Gardner, Mark Ross-Smith, Pat Romanski

News Feed Item

Venture Capital Investing Reaches Highest Level Since Q4 2000 With $13.0 Billion Invested During Q2 2014, According to the MoneyTree Report

Software Continues to Dominate VC Investing; MoneyTree Reports Largest Ever Quarterly Investment of $1.2 Billion in Q2

WASHINGTON, DC--(Marketwired - July 18, 2014) - Venture capitalists invested $13.0 billion in 1,114 deals in the second quarter of 2014, according to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. Quarterly venture capital (VC) investment activity rose 34 percent in terms of dollars and 13 percent in the number of deals, compared to the first quarter when $9.7 billion was invested in 985 deals. The total dollars invested in Q2 2014 marks the largest quarterly investment total since $13.1 billion was invested in Q1 2001. VC investments for the first half of 2014 reached $22.7 billion, the highest first half total since 2001.

Dollars invested in the Software industry experienced another significant increase in Q2 2014, reaching $6.1 billion, which marks only the fourth time since 1995 that investments in Software companies have exceeded $6 billion in a single quarter. The large quarterly total is due in large part to half of the 10 largest deals of the quarter falling into the Software industry, including a $1.2 billion deal, the largest single quarterly deal reported by the MoneyTree Report in the history of the report, which began in 1995.

"Investments going into companies with disruptive technologies remained strong in the second quarter, and VC investing is on pace to exceed the $30 billion invested in 2013," remarked Mark McCaffrey, global software leader and technology partner at PwC. "When we step back, we not only see technology as a megatrend impacting the way we live, but it's also disrupting entire industries by bringing the suppliers even closer to consumers. And, as the value of this technology is undeniable, we see VCs as well as non-traditional investors pursuing these deals more aggressively, resulting in higher valuations and larger capital investments. We're also seeing a shift in the risk profile from the risk of adoption of the technology to the risk in investing in a segment where companies are fiercely battling for market share and the market leader is yet to be determined."

"Not since the early 2000s have we witnessed this level of quarterly investment activity. Despite being over $15 billion below the peak, you can't ignore the historical significance of venture investment during the second quarter," said Bobby Franklin, President and CEO of NVCA. "Before alarmists declare a repeat of the dot-com bubble, it's important to keep in mind that a lot of this activity was driven by a handful of eye-popping investment rounds, including a record-setting funding round of $1.2 billion. Additionally, we hear anecdotally from members about the emergence of new investors in the innovation economy, including the rise of hedge funds, mutual funds and other non-traditional investors making direct investments into presumably pre-IPO companies." 

Industry Analysis

The Software industry received the highest level of funding of all industries, rising 50 percent from the prior quarter to $6.1 billion invested during the second quarter of 2014. The Software industry also counted the most deals in Q2 at 454, a 7 percent increase from the prior quarter. Part of the dramatic increase in investing can be attributed to the largest deal of the quarter going to a software company. The $1.2 billion Expansion stage investment in a transportation software company is the largest deal of the quarter as well as the single largest quarterly investment recorded by the MoneyTree Report since it began reporting on venture capital investing in 1995.

The Biotechnology industry was the second largest sector for dollars invested with $1.8 billion going into 122 deals, rising 69 percent in dollars and 7 percent in deals from the prior quarter. The increase in dollars invested can be at least partially attributed to two large Later stage funding rounds totaling nearly $320 million. The Medical Devices and Equipment industry also experienced an increase in dollars and deals compared to the first quarter, rising 8 percent in dollars and 12 percent in deals in Q2, to $649 million in 73 deals.

The Media & Entertainment industry captured the third largest total in Q2 with $1.0 billion flowing into 124 deals. This represented a 40 percent increase in dollars and a 9 percent increase in deals compared to the prior quarter. The increase in dollars invested can be partially attributed to a large deal, the fifth largest in the quarter.

Nine of the 17 MoneyTree industries experienced decreases in dollars invested in the second quarter, including Business Products and Services (69 percent decrease), Telecommunications (43 percent decrease), and Semiconductors (29 percent decrease).

Venture capitalists invested $2.7 billion into 270 Internet-specific companies during the second quarter of 2014. This investment level is 18 percent higher in dollars and 20 percent larger in deals than the first quarter of 2014 when $2.3 billion went into 225 deals. Two of the top eleven deals for the quarter were in the Internet-specific category. 'Internet-Specific' is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company's primary industry category.

Stage of Development

Seed stage investments rose 46 percent in dollars and 20 percent in deals with $189 million invested into 55 deals in the second quarter. Early stage investments rose 17 percent in dollars and 9 percent in deals with $3.8 billion going into 522 deals. Seed/Early stage deals accounted for 52 percent of total deal volume in Q2, compared to 53 percent in the prior quarter. The average Seed deal in the second quarter was $3.4 million, up from $2.8 million in the first quarter of 2014. The average Early stage deal was $7.3 million in Q2, up from $6.8 million in the prior quarter. 

Expansion stage dollars rose 53 percent in the second quarter, with $5.7 billion going into 308 deals. Overall, Expansion stage deals accounted for 28 percent of venture deals in Q2, up slightly from 27 percent in the first quarter of 2014. The average Expansion stage deal was $18.7 million, up dramatically from $14.0 million in Q1 2014, due in part to the largest deal of the quarter falling into the expansion stage of development.

Investments in Later stage deals increased 25 percent in dollars and 19 percent in deals to $3.2 billion going into 229 rounds in the second quarter. Later stage deals accounted for 21 percent of total deal volume in Q2, up slightly from 20 percent in the prior quarter when $2.6 billion went into 193 deals. The average Later stage deal in the second quarter was $14.0 million, up from $13.3 million in the prior quarter.

First-Time Financings

First-time financing (companies receiving venture capital for the first time) dollars increased 48 percent to $1.9 billion in Q2, while the number of companies rose 20 percent from the prior quarter to 351. First-time financings accounted for 14 percent of all dollars in Q2 while first-time deals accounted for 32 percent of all deals in the second quarter.

Of the companies receiving venture capital for the first time in Q2, Software companies captured the largest share and accounted for 40 percent of the dollars and 44 percent of the deals with 155 companies capturing $743 million. First-time financings in the Life Sciences sector rose 3 percent in dollars from the prior quarter with $267 million going into 32 companies, compared with 38 such companies receiving $261 million in Q1. The average first-time deal in the second quarter was $5.3 million, a jump from $4.3 million in the prior quarter. Seed/Early stage companies received the bulk of first-time investments, capturing 57 percent of the dollars and 75 percent of the deals in the second quarter of 2014.

MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org.

Note to the Editor
Information included in this release or related venture capital investment data should be cited in the following way: "The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters" or "PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters." After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA or MoneyTree Report. Charts and tables displaying the data are sourced to "PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report, Data: Thomson Reuters." After the first reference, subsequent references may refer to PwC/NVCA MoneyTree Report, PwC/NVCA, MoneyTree Report or MoneyTree. Venture capital firms invested $13.0 billion during Q2 2014, according to the MoneyTree report

About the PricewaterhouseCoopers/National Venture Capital Association MoneyTree™ Report
The MoneyTree™ Report measures cash-for-equity investments by the professional venture capital community in private emerging companies in the U.S. It is based on data provided by Thomson Reuters. The survey includes the investment activity of professional venture capital firms with or without a U.S. office, SBICs, venture arms of corporations, institutions, investment banks and similar entities whose primary activity is financial investing. Where there are other participants such as angels, corporations, and governments, in a qualified and verified financing round the entire amount of the round is included. Qualifying transactions include cash investments by these entities either directly or by participation in various forms of private placement. All recipient companies are private, and may have been newly-created or spun-out of existing companies.

The survey excludes debt, buyouts, recapitalizations, secondary purchases, IPOs, investments in public companies such as PIPES (private investments in public entities), investments for which the proceeds are primarily intended for acquisition such as roll-ups, change of ownership, and other forms of private equity that do not involve cash such as services-in-kind and venture leasing.

Investee companies must be domiciled in one of the 50 U.S. states or DC even if substantial portions of their activities are outside the United States.

Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and/or the investee companies. Only professional independent venture capital firms, institutional venture capital groups, and recognized corporate venture capital groups are included in venture capital industry rankings.

About the National Venture Capital Association

Venture capitalists are committed to funding America's most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. As the voice of the U.S. venture capital community, the National Venture Capital Association empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community's preeminent trade association, the NVCA serves as the definitive resource for venture capital data and unites its nearly 400 members through a full range of professional services. For more information about the NVCA, please visit www.nvca.org.

The PwC Private Equity & Venture Capital Practice is part of the Global Technology Industry Group, www.pwcglobaltech.com. The group is comprised of industry professionals who deliver a broad spectrum of services to meet the needs of fast-growth technology start-ups and agile, global giants in key industry segments: networking & computers, software & Internet, semiconductors, life sciences and private equity & venture capital. PwC is a recognized leader in each industry segment with services for technology clients in all stages of growth.

About PwC US

PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 184,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US. Gain customized access to our insights by downloading our thought leadership app: PwC's 365™ Advancing business thinking every day.

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 2014 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC US refers to the US member firm, and PwC may refer to either the PwC network of firms or the US member firm. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

About Thomson Reuters

Thomson Reuters is a leading source of information for businesses and professionals. Through a wide range of products and services, Thomson Reuters helps clients make better decisions, be more productive and achieve superior results. Thomson Reuters has headquarters in New York and employs more than 50,000 people worldwide.

Contacts
Clare Chachere
PwC US
512-867-8737
[email protected]

Jeffrey Davidson
Brainerd Communicators for PwC
212-739-6733
[email protected]

Ben Veghte
NVCA
703-778-9292
[email protected]

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

@ThingsExpo Stories
"A lot of times people will come to us and have a very diverse set of requirements or very customized need and we'll help them to implement it in a fashion that you can't just buy off of the shelf," explained Nick Rose, CTO of Enzu, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
Every successful software product evolves from an idea to an enterprise system. Notably, the same way is passed by the product owner's company. In his session at 20th Cloud Expo, Oleg Lola, CEO of MobiDev, will provide a generalized overview of the evolution of a software product, the product owner, the needs that arise at various stages of this process, and the value brought by a software development partner to the product owner as a response to these needs.
WebRTC services have already permeated corporate communications in the form of videoconferencing solutions. However, WebRTC has the potential of going beyond and catalyzing a new class of services providing more than calls with capabilities such as mass-scale real-time media broadcasting, enriched and augmented video, person-to-machine and machine-to-machine communications. In his session at @ThingsExpo, Luis Lopez, CEO of Kurento, introduced the technologies required for implementing these idea...
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
The Internet of Things will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, demonstrated how to move beyond today's coding paradigm and shared the must-have mindsets for removing complexity from the develop...
While not quite mainstream yet, WebRTC is starting to gain ground with Carriers, Enterprises and Independent Software Vendors (ISV’s) alike. WebRTC makes it easy for developers to add audio and video communications into their applications by using Web browsers as their platform. But like any market, every customer engagement has unique requirements, as well as constraints. And of course, one size does not fit all. In her session at WebRTC Summit, Dr. Natasha Tamaskar, Vice President, Head of C...
Who are you? How do you introduce yourself? Do you use a name, or do you greet a friend by the last four digits of his social security number? Assuming you don’t, why are we content to associate our identity with 10 random digits assigned by our phone company? Identity is an issue that affects everyone, but as individuals we don’t spend a lot of time thinking about it. In his session at @ThingsExpo, Ben Klang, Founder & President of Mojo Lingo, discussed the impact of technology on identity. Sho...
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
With all the incredible momentum behind the Internet of Things (IoT) industry, it is easy to forget that not a single CEO wakes up and wonders if “my IoT is broken.” What they wonder is if they are making the right decisions to do all they can to increase revenue, decrease costs, and improve customer experience – effectively the same challenges they have always had in growing their business. The exciting thing about the IoT industry is now these decisions can be better, faster, and smarter. Now ...
WebRTC is about the data channel as much as about video and audio conferencing. However, basically all commercial WebRTC applications have been built with a focus on audio and video. The handling of “data” has been limited to text chat and file download – all other data sharing seems to end with screensharing. What is holding back a more intensive use of peer-to-peer data? In her session at @ThingsExpo, Dr Silvia Pfeiffer, WebRTC Applications Team Lead at National ICT Australia, looked at differ...
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
WebRTC has had a real tough three or four years, and so have those working with it. Only a few short years ago, the development world were excited about WebRTC and proclaiming how awesome it was. You might have played with the technology a couple of years ago, only to find the extra infrastructure requirements were painful to implement and poorly documented. This probably left a bitter taste in your mouth, especially when things went wrong.
A critical component of any IoT project is what to do with all the data being generated. This data needs to be captured, processed, structured, and stored in a way to facilitate different kinds of queries. Traditional data warehouse and analytical systems are mature technologies that can be used to handle certain kinds of queries, but they are not always well suited to many problems, particularly when there is a need for real-time insights.
Big Data engines are powering a lot of service businesses right now. Data is collected from users from wearable technologies, web behaviors, purchase behavior as well as several arbitrary data points we’d never think of. The demand for faster and bigger engines to crunch and serve up the data to services is growing exponentially. You see a LOT of correlation between “Cloud” and “Big Data” but on Big Data and “Hybrid,” where hybrid hosting is the sanest approach to the Big Data Infrastructure pro...
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, discussed how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy applica...
SYS-CON Events announced today that Catchpoint, a leading digital experience intelligence company, has been named “Silver Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Catchpoint Systems is a leading Digital Performance Analytics company that provides unparalleled insight into your customer-critical services to help you consistently deliver an amazing customer experience. Designed for digital business, C...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...