2014 was a huge year for venture capital — actually, it was its biggest since 2000.
More specifically, venture capitalists invested $48.3 billion in 4,356 deals last year, a 61 percent increase in dollars and a 4 percent increase in the number of deals from 2013, according to the latest MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. This was also the first year in the report’s history during which two deals exceeded $1 billion each.
Not very surprisingly, Internet-specific and software companies in particular had blockbuster years. Internet-specific companies, which PwC and the NVCA define as being fundamentally dependent on the Internet regardless of their primary industry, raised a total of $11.9 billion last year, their highest level since 2000. They raised 25 percent of the total venture capital money in 2014.
Software companies raised $19.8 billion, accounting for 41 percent of total venture capital dollars in 2014. This was also the highest level of investment for software companies since 2000.
In terms of how the dollars spread among the various investment stages, money seems to have shifted away from seed funding and into more advanced stages of investment. Seed deals dropped from 3 percent of the dollars and 6 percent of the deals in 2013, to 1 percent of the dollars and 4 percent of the deals in 2014. These 192 deals, for a total of $719 million, make up the lowest number of seed deals since 2002.
Meanwhile, expansion-stage deals grabbed the most dollars — $19.8 million — for a 102 percent increase since 2013. Early-stage companies got the highest number of deals at 2,165, for a total of $15.8 billion.
Some other figures from the report worth noting:
- There were more than 40 megadeals (investments exceeding $100 million)
- Retailing/distribution had the biggest increase in dollars invested (265 percent hike), and financial services had the lowest (109 percent increase)
- First-time financings (companies raising venture capital for the first time) increased 47 percent in dollars, totaling $7.4 billion
- 68 percent of first-time deals were in early-stage companies, followed by 14 percent in expansion-stage companies
Head here for more detailed insights into venture capital’s activity in 2014, according to the report.