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VC Funding Slows as Big Funds Crowd into Late-Stage Venture Deals

Xconomy National — 

Following a December surge, when U.S. venture firms invested $7.2 billion in 342 deals nationwide, VC activity reset at a lower pace during the first quarter of 2015, according to data being released today by CB Insights.

The New York venture capital tracker says VCs invested $11.3 billion in 805 startups over the three months that ended March 31.

That was a 17.5 percent drop from the $13.7 billion that VCs invested in the prior quarter, and a 14.6 percent decline from 943 deals in the fourth quarter.

In the first quarter of 2014, venture firms invested $10.1 billion in 918 deals.

Yet the first-quarter decline in VC activity belied an increase in overall investment activity, as hedge funds, private equity, mutual funds, and sovereign wealth funds poured more capital into later-stage deals with venture-backed companies. When such sources are included, CB Insights says 1,011 U.S. venture-backed companies raised a total of $17.7 billion in the first quarter.
CB Insights Q1 2015
So venture firms are facing more competition in later-stage deals. According to CB Insights, VC firms typically lack the amount of assets that mutual funds and big private equity funds have under management, and VCs might not be willing to match the valuations that bigger players are offering.

“What we are seeing is … Next Page »

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