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Q3 MoneyTree Report Includes Monster Financial Services Deal And Some Drop Down Categories.

By Rob Starr, Big4.com Content Manager

The PwC/NVCA MoneyTree™ Report based on data from Thomson Reuters for Q3 had a healthy dose of the kind of good news that has many people believing the economic situation has found a solid footing if not its first serious ascent in several years. The $47.2 billion invested so far in 2015 is higher than full year totals for 17 of the last 20 years and the usual suspects for the positive news are getting some much needed support from what once were some unlikely sectors and investors.

Thomas

Tom Ciccolella

“Software is still fairly dominant but here are other sectors outside of biotech joining the billion dollar club,” said Tom Ciccolella, US Venture Capital Market Leader at PwC., naming IT Services, Media and Entertainment and even the Financial Services Industry as new players at the big money table. In fact, Social Finance Inc. from San Francisco is the peer to peer lending solutions provider that broke the ice for financial services with a billion dollar deal. Overall, Q3 marks the seventh consecutive quarter where more than $10 billion of venture capital was invested.

Ciccolella notes the money is getting spread out more as companies mature in different spaces.

“Normally you’d see maybe three or four industries at the most get over that billion dollar mark but this quarter seemed to spread the wealth out a little bit,” he says adding one of the challenges for these new players was finding the right categories for them.

Financial services deal

“For instance, you can argue the big financial services deal this quarter has a social element to it,” he said. “ It crosses multiple industries so it’s not always the easiest to figure out where to put these transactions and there can often be a kind of dropdown between them.”

Ciccolella says this situation arises when entrepreneurs take on legacy businesses and fragment them. One of the other threads running through this quarter’s MoneyTree Report is based on another common theme found everywhere in today’s industry.
“IT is persuasive in all businesses and without it, you’ll get passed by without a doubt,” Ciccolella said adding he’s heard organizations say that regardless of what business they’re in, they need to look at themselves as a technology company to stay relevant. That sentiment is echoed in the PwC/NVCA MoneyTree Report with the software industry receiving $5.8 billion translating to 412 deals for the quarter.

Transforming
He also talked about the way investing as an industry is transforming.
“The way the industry is being financed today is different than it was say a few years back. There are alternate investment managers investing in VC backed companies now whereas that wasn’t happening before,” he said by way of explaining the prevalence of megadeals and the fact $47.2 billion has been invested so far this year.
“That’s what I think drives these numbers up. It’s not just the proportion of VCs investing as opposed to PEs and hedge funds and other folks that are not traditional VC backed investors.”

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