Venture Highlights of 2013: Early Stage Deals, Mobile, and New York

1/23/14Follow @bvbigelow

More venture data is coming out today, and it confirms some of the big-picture trends for 2013—namely, a modest increase in the amount of venture investing nationwide.

New York’s CB Insights, a venture capital database, says in its end-of-year report that the $29.2 billion that VCs invested throughout the United States in 2013 amounted to an incremental, 3 percent increase over 2012, when the firm found that venture investments totaled almost $28.4 billion.

The funding flowed into 3,353 venture deals last year, which was almost 3 percent more than in 2012, when CB Insights counted 3,267 deals. Nevertheless, the firm says the number of deals marked a post-recession high, and was the fifth straight year of record deal levels.

CB Insights’ data was more or less in line with last week’s MoneyTree Report, which said VCs invested $29.4 billion in 3,995 deals in 2013. That was a 7 percent increase in dollars and a 4 percent increase in deals over 2012.

DJX VentureSource also showed an incremental improvement in venture funding, but a decline in the number of deals. The Dow Jones report says VCs invested nearly $33.1 billion in 3,480 deals last year. That was slightly better than the $32.8 billion invested in 2012, but a 4 percent drop from the 3,699 deals in the previous year.

Some highlights extracted from each of the new reports:

—CB Insights says venture firms invested $893 million in 843 seed stage deals last year. VCs deployed more capital in early stage investment rounds, and the percentage of capital invested in Series D rounds fell from 18 percent in 2012 to 14 percent in 2013. Amid a proliferation of new “micro” venture firms, the number of seed-stage deals increased to 26 percent of the overall deal share in 2013 (from 24 percent in 2012). The share of Series A deals also ticked up year-over-year, from 27 percent to 29 percent.

—DJX VentureSource reports that venture capital funds raised a total $19.7 billion from pensions, university endowments and other limited partners for 229 funds in 2013. That was down almost 10 percent from $21.9 billion VCs raised in 2012 for 199 funds. DJX VentureSource said OrbiMed Private Investments V raised $735 million from its investors in the fourth quarter.

—CB Insights listed Andreessen Horowitz as the most-active VC of 2013, although it did not disclose the number of deals. The second most-active VC was 500 Startups, followed by Google Ventures, New Enterprise Associates, Kleiner Perkins Caufield & Byers, Khosla Ventures, First Round Capital, SV Angels, Lerer Ventures, and Sequoia Capital.

—CB Insights christened 2013 as “The Year of Mobile.” The three months that ended September 30th was the first quarter in which venture investments in mobile telecommunications technologies topped $1 billion, and the fourth quarter was equally impressive, with VCs providing almost $1.1 billion in funding for mobile deals. Powered by mega-funding deals for mobile startups like Uber ($258 million) and AirWatch ($200 million), the firm says VC funding for mobile startups amounted to 13 percent of the $29.2 billion total invested in 2013, up from 9 percent of the total in 2012.

—Both sources showed that venture-backed IPOs soared in 2013, although CB Insights notes that much of the increase was driven by healthcare IPOs, and the number of tech IPOs declined. Both showed a substantial decrease in the number of mergers and acquisitions involving venture-backed companies.

—CB Insights says the $2.9 billion that VCs invested in 396 companies in New York is a five-year high for the region, and a 49 percent jump from the almost $2 billion invested in 2012. While New York had more funding deals than Massachusetts in 2013, venture funding in the Bay State amounted to just over $3 billion. In New York, both funding and deals accelerated, while in Massachusetts, CB Insights says year-over-year funding and deals declined slightly.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • All Hat, No Cattle

    Since at least 2005 VC firms have invested more (in total) than they’ve raised, as noted here for 2012 and 2013. This explains in part the shrinkage in VC investment.