Driven by Big Deals, VC Funding So Far Already Has Eclipsed 2014

Xconomy National — 

U.S. venture firms invested $19.8 billion in 1,035 companies during the third quarter that ended September 30, putting VC funding on track to reach a five-year high, according to a quarterly Venture Pulse Report being released today by CB Insights and KPMG.

While the deal count was lower than the 1,276 companies that got venture funding in the same quarter last year, the three-month funding total was 52 percent higher than the $13 billion that VCs invested in the third quarter of 2014, according to the report.

A running tally of venture funding through the first nine months of 2015 reached $57.9 billion at the end of September, which already exceeds the year-long total of $56.5 billion in 2014.

One factor that’s boosting the funding total is what CB Insights describes as “the rise of the mega-round.” According to the firm, 37 venture-backed companies in the United States—including Uber, Social Finance, DraftKings, Avant, and Thumbtack—raised $100 million or more during the three months that ended September 30.

Venture Pulse Report from KPMG and CB Insights

Q3 VC activity in California

(Casting a slightly bigger net, CB Insights reports that the 12 largest rounds of the quarter in North America (the United States, Canada, Mexico, Central America, and the Caribbean) totaled $5.7 billion, or more than 28 percent of all funding in North America.)

Venture Pulse Report from KPMG and CB Insights

Q3 VC activity in New York

The nine-month deal count of 3,455, however, lags well behind the 3,746 deals that CB Insights counted in the first nine months of 2014. This year’s deal count is more comparable to the pace of deals in 2013, when VCs had invested in 3,387 U.S. companies by the end of September, according to CB Insights.

One explanation the firm offered for the lower third-quarter deal count was a slowdown in seed stage deals, even though there are more “micro VCs” (funds with less than $100 million in assets under management) and multi-stage funds investing.

CB Insights noted that seed-stage deals accounted for just 23 percent of all U.S. deals in the quarter—a five-quarter low. Conversely, mid-stage (Series B and Series C) deals reached a five-quarter high, accounting for 27 percent of all 1,035 deals.

Venture Pulse Report from KPMG and CB Insights

Q3 VC activity in Massachusetts

Globally, venture-backed startups raised $37.6 billion during the third quarter, 82 percent higher than the $20.6 billion that VCs invested worldwide during the same quarter in 2014, according to CB Insights. The numbers were boosted by 10 deals that raised $500 million or more (including five that raised over $1 billion).

Investors around the world are also targeting bigger and bigger deals. According to CB Insights, Asia far exceeded the United States and Europe in late-stage deals—primarily on the strength of mega-rounds for on-demand and e-Commerce companies.

Venture Pulse Report from KPMG and CB Insights

Q3 VC activity in Pacific Northwest

In another continuing trend, CB Insights counted 23 new unicorns—venture-backed companies valued in excess of $1 billion—during the third quarter, which brings the global tally of what was supposed to be a rare and mystical phenomenon to 58 through the first nine months of 2015.

Venture Pulse Report from KPMG and CB Insights

Q3 VC activity in Texas