Big Late-Stage Deals and Unicorns Drive U.S. Venture Activity Higher

7/10/14Follow @bvbigelow

Two years ago, VC firms shrugged off sluggish economic conditions to invest $8.1 billion in 812 U.S. deals in the second quarter. It was the highest total in more than a decade—and represented a high water mark for venture dollars invested that stood until the first quarter of this year.

Now a surge in venture funding has erased that line, according to the latest report from CB Insights, a New York firm that tracks VC activity.

After investing almost $10 billion in 880 deals nationwide during the first three months of 2014, VCs went into overdrive, investing more than $4 billion per month during the spring quarter—a much higher pace than in recent years. As a result, venture firms deployed a total of nearly $13.9 billion in 974 deals during the three months that ended June 30—the highest level since the spring of 2001, according to CB Insights.

The 39 percent jump over the previous quarter in deployed capital was fueled partly by late-stage mega deals for such household names as Airbnb, Uber, and Pinterest, according to the firm’s analysts. During the first half of 2014, CB Insights also spotted more “unicorns”—the rare, first-time financings of companies like Eventbrite, Jasper Wireless, and Stripe that each carried an overall valuation of $1 billion or more.

Q2'14 CBInsights VC ActivityThe number of late-stage deals (Series D rounds and later) rose to a five-quarter high, taking 17 percent of all of all venture deals during the second quarter, and prompting the analysts at CB Insights to wonder if the tech IPO pipeline is heating up.

However, the number of venture-backed IPOs during the quarter declined slightly to 24, from 35 in the previous quarter. Meanwhile, mergers and acquisitions of venture-backed companies increased slightly, to 186 from 174, over the same two quarters.

CB Insights says that … 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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