First-Quarter Venture Funding at $9.6B in U.S., Highest Since 2001 (& Top 10 Deals)

4/18/14Follow @bvbigelow

Right out of the gate, venture capital funding surged nationwide during the first three months of 2014—driven largely by substantial investments in expansion-stage IT and software companies, according to the MoneyTree Report being released today.

Eight of the ten biggest deals involved IT, software, or Web companies based in Northern California. (The top 10 deal list is below.)

VCs invested almost $9.5 billion in U.S. startups during the first quarter—marking the largest amount of venture capital deployed since the second quarter of 2001. It was 12 percent more than the $8.4 billion venture firms invested during the previous quarter, and 57 percent more than the $6 billion that VCs invested during the first quarter of 2013, according to MoneyTree data.

The first-quarter deal count was relatively modest at 951, or down 14 percent from the 1,112 deals in the previous quarter, and only marginally higher than the 916 deals counted in the same quarter of 2013. But the deal count also offered the biggest clue to interpreting the MoneyTree data.

Money Tree“Software by itself is a relatively capital-efficient category,” according to John Taylor, who helps to produce the MoneyTree Report as director of research at the National Venture Capital Association NVCA). In 2012, for example, the venture industry was making a lot of small investments in early stage software companies. “What we’re now talking about are companies moving from seed to expansion stage rounds,” Taylor said during a phone interview yesterday.

Software got more venture funding than any other sector—just over $4 billion, or more than 42 percent of the entire $9.4 billion venture firms invested during the quarter. That represented a 39 percent increase over the fourth-quarter of 2013, when VCs invested almost $2.9 billion in 409 software deals. The MoneyTree Report counted 414 software deals during the first quarter.

The MoneyTree Report is a quarterly survey of venture activity, prepared by the NVCA and PricewaterhouseCoopers, based on … Next Page »

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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