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Q1 affirms investor’s faith in the venture capital ecosystem

By Rob Starr, Big4.com Content Manager

 

The MoneyTree™ Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters was recently released for  the first quarter. While it marked the ninth consecutive quarter with more than $10 billion in venture capital invested in a single quarter and a continuation of trends seen in  both 2014 and 2015, the burst of spending when the gates opened wasn’t as frenzied in Q1 as it had been in the previous two years.

Still, Tom Ciccolella, US Venture Capital Market Leader at PwC, doesn’t feel the predominantly negative forecasts that preceded the release of the numbers were justified.

“What we saw was a continuation of the tends we saw in 2014 and 2015,” he said “Maybe not to the same extent we saw last year, but the Megadeal continued and we had 10 of those this quarter. A lot of people were thinking this was going to be a down quarter and I don’t think that

Tom Ciccolella

Tom Ciccolella

played out.”

Car-sharing deal

One of the definite high-water marks was the later stage deal involving the car-sharing application LYFT that was valued at $1,000,000,000 dollars.  Ciccolella also notes venture capital funding for Q1 this year is  robust even when compared to the higher spikes in Q1 2015 and placed in the overall context of  MoneyTree Report with a history going back over 20 years.

He points out there are several other familiar tendencies in this latest report.

“The other thing that has some consistency is where the investment is going like Software and Biotech.”

The Software industry got the highest level of funding across all industries in Q1, with $5.1 billion going into 376 deals. That represents a 12 percent increase in dollars  but a 5 percent decrease in deals over the fourth quarter of last year. The Biotechnology industry was a close second with $1.8 billion going into 118 deals. Those numbers represented an 11 percent increase in dollars and a 19 percent increase in deals over the previous quarter.

Metrics

Ciccolella furthers one of the metrics highlighting the continued health of the venture capital funding landscape is a one/two punch in that the number of Megadeals is still considerable and the research shows entrepreneurs with new ideas are still getting the funding they need.

“When you couple these things together, you’re still getting in excess of $10 billion dollar quarter for the ninth quarter running,” he says adding, however,  he doesn’t think this pace of expansion is unlimited.

“At some point the money needs to go to work and companies need to execute on their business plan.”

 

 

 

 

 

 

 

 

 

 

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