Where’s the venture capital money going these days?
Into internet and software companies, that’s where. It’s a sign that not only is there still money sloshing around looking for investment opportunities, but a big endorsement of what investors see as the promise of the online marketplace.
There was a lot of dough looking for a home, too.
Investors plowed $ 48.3 billion into 4,356 deals in 2014, an increase of 61 percent in dollars and a 4 percent increase in deals over 2013, according to a MoneyTree Report released by PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA).
“Internet-specific companies captured $ 11.9 billion in 2014, marking the highest level of Internet-specific investments since 2000,” according to PwC. “Additionally, annual investments into the Software industry also reached the highest level since 2000 with $ 19.8 billion flowing into 1,799 deals in 2014. Dollars going into software companies accounted for 41 percent of total venture capital investments in 2014, the highest percentage since the inception of the MoneyTree Report in 1995.”
“2014 has been an exciting year for venture capital investing,” noted Mark McCaffrey, global software leader and technology partner at PwC. “For the first time in MoneyTree history, we saw two deals exceed one billion dollars and more than 40 megadeals — which are investments exceeding $ 100 million.”
McCaffrey thinks entrepreneurial startups are where capital investors want to be.
“There’s been an influx of private equity investors at a level we’ve not seen previously,” explained McCaffrey. “As a result, entrepreneurial companies are capable of disrupting entire industries and leveraging investment dollars to expand to the global markets. With the continued economic conditions, we would expect venture capital investing to be positioned to continue strong levels of investing in 2015.”
Bobby Franklin, President and CEO of NVCA, agrees.
“With the fundraising environment improving in 2014 and non-traditional investors increasingly joining venture capital firms in later-stage funding rounds, more capital was deployed to the startup ecosystem in 2014 than any year since 2000,” said Franklin about the report. “As the epicenter for technological innovation, the United States has a wealth of groundbreaking startup companies that require the financial capital and business expertise of venture investors to take their businesses to the next level.”
The report is worth perusing. It contains sector and industry analyses showing where the money is going, as well as interesting highlights about first-time financing deals and more.
MoneyTree Report results are available online here.