Venture Investing Hits Record $19B in Second Quarter

[Updated 7/17/15, 7:40 a.m. See below.] There’s plenty of talk about a potential bubble in the market, whether in tech, biotech, or elsewhere. True or not, one fact that’s real is that there is plenty of money flowing into startups. The second quarter of 2015 produced the highest level of venture funding since at least 2010, and possibly longer, according to data released by Dow Jones VentureSource.

The $19.2 billion raised from venture capital firms during this spring and early summer is more than any single quarter since the start of 2010, when the VentureSource data starts. The next closest was the $17.7 billion raised in the fourth quarter of last year, according to the data.

The second quarter of 2015 produced lots of deals, too, at 1,034. The only time there have been more deals in the last 4.5 years was in the second quarter of 2014, which counted 1,038.

Venture funding in the second quarter of 2015 was the highest level since 2000, according to the MoneyTree Report, which may track different deals. That report, compiled by PricewaterhouseCoopers and the National Venture Capital Association using data from Thomson Reuters, recorded the second quarter’s funding at $17.5 billion. [MoneyTree data added throughout—Eds.]

Those numbers indicate there may have been plenty of small venture agreements made across the nation. Only three companies received fundings above $500 million: San Francisco’s Airbnb and YourPeople, as well as Greenwood, CO-based FourPoint Energy.

Most of the record-level funding is once again thanks to San Francisco, the data show. The city was responsible for $9 billion of the state’s nearly $11 billion of total venture funding. Deals such as Airbnb’s $1.5 billion late-stage round, as well as Credit Karma’s $175 million Series D, helped San Francisco contribute almost half of the national $19 billion total. (See VentureSource chart below.)

Venture Funding By City

Venture Funding By City

Not everyone had a blockbuster quarter. Venture investments in Texas dropped dramatically to $290.4 million for the three months ended June 30, down 65 percent from the prior quarter. Most of that money was given to Irving, TX-based OneSource Virtual during a $150 million venture round in June. MoneyTree recorded slightly lower numbers at $237 million for the state.

During that slower period, smaller firms took the lead by investing in more deals, according to the VentureSource data. Capital Factory, the Austin-based incubator and accelerator, invested in four deals, more than local firms Silverton Partners and LiveOak Venture Partners. They each found three.

Austin investments accounted for 18 of the state’s 28 deals, though only 36 percent (about $104 million) of the total venture funding for the state, according to the data.

At the opposite end of the spectrum, Colorado had a great quarter with $872.7 million invested, up from $87.3 million in the first quarter of 2015, according to the VentureSource data. But $619 million of that came from a single deal: the aforementioned FourPoint Energy investment on June 30.

Foundry Group was the most active investor in the state with four agreements. While it may not be the smallest firm, with more than $1 billion under management, it still is willing to invest in smaller seed financing. It’s had plenty of success, too, such as with the recent IPO for Fitbit.

MoneyTree’s results show a far smaller dollar amount at $330.3 million total for Colorado. It doesn’t include the FourPoint funding in its list.

Boston had its third-highest quarter of funding since 2010, raising $1.31 billion through 97 deals.

Similarly, New York had its best quarter since the VentureSource data starts. Companies in the city raised almost $2.9 billion. It has outraised Boston for five quarters straight, despite Boston maintaining historically higher numbers. MoneyTree accounted for $2.3 billion of deals in New York and did not provide data for Boston.

That will be little consolation for Seattleites, who lost more than just a Super Bowl to Boston. They also came in far behind in the fundraising race, with only $444.45 million. The MoneyTree data showed $434.9 million in Washington.

Likewise, San Diego was exceedingly outmatched by its big brother to the north. The city raised $116.3 million on 22 deals during the quarter. There was $141.5 million worth of funding in the city, according to MoneyTree.

North Carolina was able to pull in more money for its 16 deals, raising $122.45 million during the quarter. More than half of that came from three first-round raises in April for drug developers: Innocrin, Spyryx Biosciences, and Precision BioSciences. (MoneyTree provided no data for North Carolina.)

Companies in Michigan raised $46.2 million, led by a $10.5 million third-round deal for NeuMoDx Molecular, according to MoneyTree.

VentureSource did not provide data for Detroit, and neither company offered data for Wisconsin.

David Holley is Xconomy's national correspondent based in Austin, TX. You can reach him at dholley@xconomy.com Follow @xconholley

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