|By PR Newswire||
|April 18, 2014 06:00 AM EDT||
WASHINGTON, April 18, 2014 /PRNewswire/ -- Venture capitalists invested $9.5 billion in 951 deals in the first 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 12 percent in terms of dollars but fell 14 percent in the number of deals, compared to the fourth quarter of 2013 when $8.4 billion was invested in 1,112 deals.
Dollars invested in the Software industry experienced another significant increase in Q1 2014, capturing $4.0 billion and further distancing it by more than three times from the second largest industry, Biotechnology. The last time Software investments reached this level was in Q4 2000. Venture capital investments into Software companies accounted for 42 percent of total dollars and 44 percent of total deals in the first quarter. Five of the top 10 largest deals for the quarter were Software companies.
"Context is everything, and when you consider the context behind the numbers, you start to understand why there was a shift in the first quarter of 2014. Seed and early stage financing numbers are down from the previous quarter, but expansion stage dollars invested are up 34 percent. This was to be expected when you consider the domination by seed and early stage deals in 2012 and 2013," said Bobby Franklin, President and CEO of NVCA. "Because these companies are now moving to the next stage of their maturing process, the investment rounds tend to be bigger, which explains why the numbers are trending toward the later stages of the investment calendar. To be sure, the spring thaw of the exit markets is providing some firms with new life, but overall capital remains constrained for most venture capital firms."
"Investments into the Software sector continue to remain healthy as investors look for companies with disruptive technology that challenges the norm," remarked Mark McCaffrey, global software leader and technology partner at PwC. "These companies are attracting significant funding from venture capitalists and non-traditional investors alike as their business models continue to provide real value across all sectors and get access to global markets. Clearly, the heightened interest is driving healthy valuations which could meet with some volatility. However, barring any significant macroeconomic event, we expect a strong level of investing to continue as these models meet customer needs and deliver value to the stakeholders."
The Software industry received the highest level of funding of all industries, rising 39 percent from the prior quarter to $4.0 billion invested during the first quarter of 2014. The Software industry also counted the most deals in Q1 at 414, approximately the same level seen in the prior quarter when 409 rounds were completed.
The Biotechnology industry was the second largest sector for dollars invested with $1.1 billion going into 112 deals, falling 23 percent in dollars and 21 percent in deals from the prior quarter. The Medical Devices and Equipment industry also experienced a decline in volume, dropping 37 percent to 61 deals in Q1, while the dollars invested rose 28 percent to $588 million. Overall, investments in Q1 in the Life Sciences sector (Biotechnology and Medical Devices) fell 10 percent in dollars and 28 percent in deals when compared to Q4 2013.
The IT Services industry captured the third largest total in Q1 with $816 million flowing into 59 deals. This represented a 33 percent increase in dollars invested compared to the prior quarter and can be primarily attributed to the largest deal of the quarter, a $325 million investment, going to a company in the IT services industry.
Nine of the 17 MoneyTree industries experienced decreases in dollars invested in the first quarter, including Telecommunications (68 percent decrease), Networking & Equipment (47 percent decrease), and Semiconductors (17 percent decrease).
Venture capitalists invested $2.3 billion into 219 Internet-specific companies during the first quarter of 2014. This investment level is 5 percent lower in dollars and 20 percent lower in deals than the fourth quarter of 2013 when $2.4 billion went into 273 deals. Four of the top ten 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 fell 64 percent in dollars and 41 percent in deals with $125 million invested into 41 deals in the first quarter. Early stage investments fell 3 percent in dollars and 18 percent in deals with $2.9 billion going into 451 deals. Seed/Early stage deals accounted for 52 percent of total deal volume in Q1, compared to 55 percent in the fourth quarter of 2013. The average Seed deal in the first quarter was $3.0 million, down from $5.0 million in the fourth quarter of 2013. The average Early stage deal was $6.4 million in Q1, up from $5.4 million in the prior quarter.
Expansion stage dollars rose 34 percent in the first quarter, with $3.9 billion going into 274 deals. Overall, Expansion stage deals accounted for 29 percent of venture deals in the first quarter, up from 26 percent in the fourth quarter of 2013. The average Expansion stage deal was $14.3 million, up dramatically from $10.3 million in Q4 2013.
Investments in Later stage deals increased 15 percent in dollars but declined 12 percent in deals to $2.5 billion going into 185 rounds in the first quarter. Later stage deals accounted for 19 percent of total deal volume in Q1, identical to the prior quarter when $2.2 billion went into 211 deals. The average Later stage deal in the first quarter was $13.8 million, up from $10.5 million in the prior quarter.
First-time financing (companies receiving venture capital for the first time) dollars decreased 25 percent to $1.2 billion in Q1, while the number of companies fell 24 percent from the prior quarter to 271. First-time financings accounted for 13 percent of all dollars in Q1, which is the lowest percentage total in the history of the survey. Companies receiving VC funding for the first time in Q1 accounted for 28 percent of all deals, which is the lowest percentage total since Q3 2009.
Nearly half of the dollars invested into companies receiving venture capital for the first time in Q1 were in the Software industry, accounting for 48 percent of the dollars and 46 percent of the deals with 126 companies capturing $571 million. First-time financings in the Life Sciences sector fell 38 percent in dollars from the prior quarter to $258 million going into 36 companies. The average first-time deal in the first quarter was $4.4 million, approximately the same as the prior quarter. Seed/Early stage companies received the bulk of first-time investments, capturing 78 percent of the dollars and 82 percent of the deals in the first quarter of 2014.
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.
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. According to a 2011 Global Insight study, venture-backed companies accounted for 12 million jobs and $3.1 trillion in revenue in the United States in 2010. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) 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, 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.
© 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.
SOURCE PwC US
In this scenarios approach Joe Thykattil, Technology Architect & Sales at TimeWarner / Navisite, presented examples that will allow business-savvy professionals to make informed decisions based on a sound business model. This model covered the technology options in detail as well as a financial analysis. The TCO (Total Cost of Ownership) and ROI (Return on Investment) demonstrated how to start, develop and formulate a business case that will allow both small and large scale projects to achieve...
May. 30, 2015 06:30 AM EDT Reads: 3,266
The move to the cloud brings a number of new security challenges, but the application remains your last line of defense. In his session at 15th Cloud Expo, Arthur Hicken, Evangelist at Parasoft, discussed how developers are extremely well-poised to perform tasks critical for securing the application – provided that certain key obstacles are overcome. Arthur Hicken has been involved in automating various practices at Parasoft for almost 20 years. He has worked on projects including database dev...
May. 30, 2015 06:00 AM EDT Reads: 2,909
Building low-cost wearable devices can enhance the quality of our lives. In his session at Internet of @ThingsExpo, Sai Yamanoor, Embedded Software Engineer at Altschool, provided an example of putting together a small keychain within a $50 budget that educates the user about the air quality in their surroundings. He also provided examples such as building a wearable device that provides transit or recreational information. He then reviewed the resources available to build wearable devices at ...
May. 30, 2015 05:30 AM EDT Reads: 4,097
There has been a lot of discussion recently in the DevOps space over whether there is a unique form of DevOps for large enterprises or is it just vendors looking to sell services and tools. In his session at DevOps Summit, Chris Riley, a technologist, discussed whether Enterprise DevOps is a unique species or not. What makes DevOps adoption in the enterprise unique or what doesn’t? Unique or not, what does this mean for adopting DevOps in enterprise size organizations? He also explored differe...
May. 30, 2015 05:30 AM EDT Reads: 3,690
Cloud Foundry open Platform as a Service makes it easy to operate, scale and deploy application for your dedicated cloud environments. It enables developers and operators to be significantly more agile, writing great applications and deliver them in days instead of months. Cloud Foundry takes care of all the infrastructure and network plumbing that you need to build, run and operate your applications and can do this while patching and updating systems and services without any downtime.
May. 30, 2015 04:30 AM EDT Reads: 3,629
Are your Big Data initiatives resulting in Big Impact or Big Mess? In her session at Big Data Expo, Penelope Everall Gordon, Emerging Technology Strategist at 1Plug Corporation, shared her successes in improving Big Decision outcomes by building stories compelling to the target audience – and her failures when she lost sight of the plotline, distracted by the glitter of technology and the lure of buried insights. The cast of characters includes the agency head [city official? elected official?...
May. 30, 2015 04:30 AM EDT Reads: 3,427
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial C...
May. 30, 2015 04:30 AM EDT Reads: 5,552
Storage administrators find themselves walking a line between meeting employees’ demands to use public cloud storage services, and their organizations’ need to store information on-premises for security, performance, cost and compliance reasons. However, as file sharing protocols like CIFS and NFS continue to lose their relevance, simply relying only on a NAS-based environment creates inefficiencies that hurt productivity and the bottom line. IT wants to implement cloud storage it can purchase a...
May. 30, 2015 04:30 AM EDT Reads: 2,903
The emergence of cloud computing and Big Data warrants a greater role for the PMO to successfully manage enterprise transformation driven by these powerful trends. As the adoption of cloud-based services continues to grow, a governance model is needed to orchestrate enterprise cloud implementations and harness the power of Big Data analytics. In his session at Cloud Expo, Mahesh Singh, President of BigData, Inc., discussed how the Enterprise PMO takes center stage not only in developing the app...
May. 30, 2015 04:30 AM EDT Reads: 2,710
SYS-CON Events announced today that BMC will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BMC delivers software solutions that help IT transform digital enterprises for the ultimate competitive business advantage. BMC has worked with thousands of leading companies to create and deliver powerful IT management services. From mainframe to cloud to mobile, BMC pairs high-speed digital innovation with robust...
May. 30, 2015 04:15 AM EDT Reads: 1,044
After a couple of false starts, cloud-based desktop solutions are picking up steam, driven by trends such as BYOD and pervasive high-speed connectivity. In his session at 15th Cloud Expo, Seth Bostock, CEO of IndependenceIT, cut through the hype and the acronyms, and discussed the emergence of full-featured cloud workspaces that do for the desktop what cloud infrastructure did for the server. He also discussed VDI vs DaaS, implementation strategies and evaluation criteria.
May. 30, 2015 04:00 AM EDT Reads: 4,641
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core...
May. 30, 2015 03:30 AM EDT Reads: 5,402
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
May. 30, 2015 03:00 AM EDT Reads: 5,815
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective ...
May. 30, 2015 02:00 AM EDT Reads: 6,194
Collecting data in the field and configuring multitudes of unique devices is a time-consuming, labor-intensive process that can stretch IT resources. Horan & Bird [H&B], Australia’s fifth-largest Solar Panel Installer, wanted to automate sensor data collection and monitoring from its solar panels and integrate the data with its business and marketing systems. After data was collected and structured, two major areas needed to be addressed: improving developer workflows and extending access to a b...
May. 30, 2015 01:00 AM EDT Reads: 2,017