VentureSource
U.S. -- 3Q 2014 VentureSource The following report presents Dow Jones VentureSource’s quarterly findings for U.S. venture capital fundraising, investment, valuation, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.
Highlights for 3Q 2014 include:
U.S. venture capital fundraising amount raised on decline from 2Q 2014;
Venture capital investment on decline in 3Q 2014;
Median pre-money valuation totaled $30M, a 42% decrease from the valuation figure for 2Q 2014;
While venture-backed mergers and acquisitions (M&As) amount raised and transactions experienced an increase, initial public offerings (IPOs) still on decline.
2 VentureSource Venture Fundraising in U.S. on decline from 2Q 2014
FUNDRAISING 81 funds garnered $6.5 billion in 3Q 2014, down 16% from the amount raised in the previous quarter, while
number of funds stayed flat.
JP Morgan Digital Growth Fund II LP was the largest U.S. venture capital fund of 3Q 2014, raising $996 million and accounting for 15% of the total amount raised during the quarter.
Median U.S. fund size was $119 million in the three quarters of 2014.
U.S. VC Fundraising (2011 – 2014) 90 $12.00 Based on multiple closings 80 $10.00 70
60 $8.00
50 $6.00 40
30 $4.00
20 $2.00 10
0 $0.00 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Amount Raised ($B) $2.92 $6.83 $7.45 $6.57 $5.11 $3.06 $4.63 $6.73 $4.03 $4.84 $10.35 $7.75 $6.49 Number of Funds 50 54 55 46 55 56 60 57 64 80 82 81 81
3 VentureSource Largest VC Funds Raised in 3Q 2014
FUNDRAISING
Firm Name Fund Name Amount ($M) City State Offering Status Fund Type Fund Category Closing Type
JP Morgan Digital Growth Fund Mul -stage venture JPMorgan Chase & Co. $996.38 New York NY Open First II LP capital Venture Capital
Kleiner Perkins Caufield & Late-stage venture KPCB Digital Growth Fund II LP $750.00 Menlo Park CA Closed Final Byers capital Venture Capital
Late-stage venture Meritech Capital Partners Meritech Capital Partners V LP $500.00 Palo Alto CA Closed Final capital Venture Capital
Sofinnova Venture Partners IX Mul -stage venture Sofinnova Ventures Inc. $500.00 Menlo Park CA Closed Final LP capital Venture Capital
Kleiner Perkins Caufield & Kleiner Perkins Caufield & Byers Early-stage venture $450.00 Menlo Park CA Closed Final Byers XVI LP capital Venture Capital
4 VentureSource U.S. Venture Investment on Decline in 3Q 2014
U.S.-based companies raised $11 billion from 899 venture capital deals during 3Q 2014, a 24% and 7% FINANCING decrease in capital and deal count, respectively, from the previous quarter.
Compared to the same period in 2013, amount invested registered a 16% increase, while number of deals dipped 5%.
Business and Financial Services and Healthcare were the strongest sectors, respectively with 27% and 25% share of total amount invested.
Equity Financings into U.S. – $16.00 1200 based, VC-backed Companies (2011 – 2014) $14.00
$12.00
$10.00
$8.00 1000
$6.00
$4.00
$2.00
$0.00 800 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Amount Raised ($B) $10.80 $8.11 $7.77 $9.48 $7.97 $9.18 $7.61 $8.71 $9.49 $9.53 $11.83 $14.43 $11.01 Number of Deals 963 915 895 1016 932 926 909 946 948 1012 915 966 899
5 VentureSource
FINANCING
Equity Financings into U.S.–based, VC–backed Companies, by Round Class (2011 – 2014)
Number of Deals
400
300
200
100
0 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Restart 13 11 11 14 11 18 7 7 8 11 8 7 7 Later 296 290 252 307 286 283 263 284 276 280 288 344 280 Second 156 150 141 181 146 159 147 200 199 213 182 217 184 First 327 316 309 352 328 310 339 306 325 361 300 316 331 Seed 137 106 138 122 119 107 118 118 105 98 97 46 61
6 VentureSource
FINANCING
Equity Financings into U.S.–based, VC–backed Companies, by Round Class (2011 – 2014)
Amount Raised ($B)
$12.00
$10.00
$8.00
$6.00
$4.00
$2.00
$0.00 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Restart $0.23 $0.08 $0.09 $0.16 $0.24 $0.69 $0.08 $0.18 $0.08 $0.10 $0.29 $0.16 $0.15 Later $5.99 $4.70 $4.20 $5.30 $4.69 $4.46 $4.46 $4.88 $5.25 $5.16 $6.79 $9.57 $5.93 Second $1.96 $1.47 $1.09 $1.62 $1.26 $1.38 $1.31 $1.74 $1.60 $1.85 $1.84 $2.61 $1.79 First $2.13 $1.49 $1.47 $1.97 $1.43 $1.71 $1.49 $1.35 $1.70 $1.91 $1.52 $1.83 $1.97 Seed $0.13 $0.11 $0.10 $0.10 $0.10 $0.09 $0.08 $0.09 $0.09 $0.09 $0.08 $0.05 $0.07
7 VentureSource
FINANCING
Equity Financings into U.S.-based, VC-backed Companies, Median Deal Size ($M) (2011 – 2014)
Median Equity Deal Size ($M)
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$0.00 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Median Equity Deal Size ($M) $5.26 $4.00 $3.80 $4.51 $3.79 $4.17 $4.00 $4.48 $3.69 $4.06 $4.20 $6.00 $5.00
8 VentureSource Equity Financings into U.S.-based, VC-backed Companies, by Industry Group (3Q 2014)
The Business and Financial Services sector saw the largest investment allocation, with 247 deals garnering $3 FINANCING billion and accounting for 27% of total equity investment.
Healthcare raised the second highest proportion of investment for 3Q’14 - $2.7 billion into 182 deals, down 17% and 15% in dollars and deals, respectively, from 2Q’14 figures.
Consumer Services occupies third position. Amount raised decreased 41% quarter over quarter, with $2.3 billion invested in 173 deals, a 3% drop also for the number of deals. The sector’s investment figure represents a 21% share of total equity investment into U.S. VC-backed companies for the quarter.
IT companies raised $2.1 billion across 221 deals, a 31% and 9% decrease compared to the previous quarter.
3Q’14 Industry Breakdown 3Q'14 Industry Breakdown By Amount Raised ($B) By Number of Deals
Business and Financial Services
221 Business and Financial Services 247 Consumer Goods 20% 27% Consumer Goods Consumer Services 2% Consumer Services 25 Energy & Utilities 35 Energy & Utilities 3% Healthcare 182 25% Healthcare 173 Industrial Goods & Materials 14 21% Industrial Goods & Materials 2% Information Technology Information Technology
9 VentureSource Top 5 Deals into VC-backed Companies (3Q 2014)
FINANCING
Industry Industry Raised Round Investors Co. Name Loca on Industry Code Brief Descrip on Close Date Round Type Group Segment ($M) (* denotes lead)
Legendary Movie/Music Provider of mul -media Consumer Entertainment Burbank, CA Media and Content Producers and content products including 9/30/2014 Corporate $250.00 So bank Corp.* Services Inc. Distributors film, television and comics.
Medical So ware Healthcare Provider of cloud-based Culver City, Other Early NantHealth LLC Healthcare and Informa on Administra on transforma onal healthcare 9/30/2014 $250.00 Kuwait Investment Authority* CA Stage Services So ware services.
Developer of treatments for South San Biotechnology MyoKardia Inc. Healthcare Biopharmaceu cals gene c cardiovascular 9/17/2014 Corporate $200.00 Sanofi-Aven s Francisco, CA Therapeu cs disease.
Provider of enterprise data Business and Business Support Data Management Accel Partners, Insight Venture Qualtrics LLC Provo, UT collec on and analysis 9/24/2014 Later $150.00 Financial Services Services Services Partners*, Sequoia Capital products.
GIC Private Ltd.*, Goldman Payment/ San Francisco, Business and Financial Ins tu ons Provider of mobile phone Sachs Group Inc., Rizvi Traverse Square Inc. Transac onal 8/19/2014 5th $150.00 CA Financial Services and Services payment solu ons. Management LLC, Victory Park Processing Capital*
10 VentureSource
FINANCING
Most Active Investors for U.S.-based, VC-backed Companies (3Q 2014)
20 19 18 18 18 16 16 15
14
12
10
8
6
4
2
0 New Enterprise Google Ventures Andreessen Horowitz Kleiner Perkins Bessemer Venture Associates Inc. Caufield & Byers Partners
11 VentureSource Number of Deals Amount Raised ($B) by Primary Region by Primary Region
FINANCING 3Q 2014 3Q 2014
Alaska/ Islands 2 $0.0009 Mid-Atlantic 195 $1.55 Midwest Central 18 $0.15 Midwest East 62 $0.47 Mountain 37 $0.73 New England 83 $0.79 Northern California 310 $4.53 Pacific Northwest 37 $0.42 South Central 35 $0.33 South East 50 $0.21 Southern California 67 $1.26
Number of Deals in 3Q 2014 Amount Raised ($B) in 3Q 2014 by Primary Region by Primary Region
Alaska/Islands Alaska/Islands
Mid-Atlantic Mid-Atlantic
Midwest Central Midwest Central
Midwest East Midwest East
Mountain Mountain
New England New England
Northern California Northern California
Pacific Northwest Pacific Northwest
South Central South Central
South East South East
Southern California Southern California
12 VentureSource Number of Deals Amount Raised ($B) by subregion by subregion
FINANCING 3Q 2014 3Q 2014
San Francisco Bay Area 304 $4.51 Boston Metro 76 $0.71 New York Metro 126 $1.21 Potomac 30 $0.13 Los Angeles Metro 33 $0.89 San Diego Metro 21 $0.22 Orange County 12 $0.16 Seattle Metro 28 $0.39 Austin Metro 21 $0.08 Dallas-Fort Worth 9 $0.11 Chicago Metro 25 $0.21
Subregion Breakout Subregion Breakout Number of Deals Amount Raised ($B)
Number of Deals by Subregion Amount Raised ($B) by Subregion
San Francisco Bay Area 304 San Francisco Bay Area $4.51 Boston Metro 76 Boston Metro $0.71 New York Metro 126 New York Metro $1.21 Potomac 30 Potomac $0.13 Los Angeles Metro 33 Los Angeles Metro $0.89 San Diego Metro 21 San Diego Metro $0.22 Orange County 12 Orange County $0.16 Seattle Metro 28 Seattle Metro $0.39 Austin Metro $0.08 Austin Metro 21 Dallas-Fort Worth $0.11 Dallas-Fort Worth 9 Chicago Metro $0.21 Chicago Metro 25
13 VentureSource
VALUATIONS
Equity Financings into U.S. – based, VC-backed Companies, Median Pre-money Valuation ($M) (2011 – 2014)
$60.00
$50.00
$40.00
$30.00
$20.00
$10.00
$0.00 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Median Pre-money Valuation ($M) $29.25 $21.00 $18.05 $18.63 $29.88 $40.00 $17.75 $24.20 $15.80 $21.00 $26.50 $51.43 $30.00
14 VentureSource Venture M&A and IPO Market Activity in the U.S. during 3Q 2014
Mergers and acquisitions (M&As) of venture-backed companies in 3Q 2014 increased by 73% in value from LIQUIDITY those completed in 2Q 2014, with 127 deals garnering $20 billion.
22 venture-backed IPOs took place during 3Q 2014, a 12% decrease from the previous quarter.
Exit Opportunities for U.S. 3Q'14 VC-backed Companies 2Q'14 (2011 – 2014) 1Q'14 4Q'13 3Q'13 2Q'13 1Q'13 4Q'12 3Q'12 2Q'12 1Q'12 4Q'11 3Q'11 0 20 40 60 80 100 120 140 160 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 IPOs 11 10 20 12 10 8 9 20 25 20 38 25 22 M&As 146 142 113 124 106 126 100 93 123 129 126 119 127
15 VentureSource U.S. VC-backed M&As (2011-2014)
127 M&As of venture-backed companies in U.S. garnered $20 billion during 3Q 2014. LIQUIDITY
In contrast with 2Q 2014, when a total of 119 transactions accumulated almost $12 billion, both number of M&As and amount raised increased by 7% and 73% respectively.
The largest M&A of the quarter was Beats Electronics LLC, which was acquired by Apple Inc. (Nasdaq: AAPL) for $2.5 billion.
U.S. VC-backed M&A Activity $25.00 160 (2011 - 2014) 140 $20.00 120
100 $15.00
80
$10.00 60
40 $5.00 20
$0.00 0 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Amount Paid ($B) $13.55 $9.67 $10.50 $11.86 $11.75 $8.69 $5.68 $9.27 $12.40 $14.25 $16.23 $11.59 $20.01 Number of M&As 146 142 113 124 106 126 100 93 123 129 126 119 127
16 VentureSource Top 3 U.S. M&As (3Q 2014)
LIQUIDITY
Company Industry Industry Amount Loca on Brief Descrip on Industry Code Close Date Round Type Acquirer Name Segment Group Paid ($M)
Beats Electronics Santa Monica, Provider of headphone Electronics and Informa on Consumer Electronics 8/1/2014 Acquisi on $2,500.00 Apple Inc. LLC CA and HD audio systems. Computer Hardware Technology
Provider of virtual reality Oculus VR Inc. Irvine, CA Sports/Leisure Goods Personal Goods Consumer Goods 7/21/2014 Acquisi on $2,000.00 Facebook Inc. gaming technology.
Operator of a video Twitch Interac ve San Francisco, Consumer pla orm and community Entertainment Consumer Services 9/25/2014 Acquisi on $970.00 Amazon.com Inc. Inc. CA Informa on Services for gamers.
17 VentureSource U.S. VC-backed IPOs (2011-2014)
22 venture-backed companies raised $1.3 billion through public offerings in 3Q 2014. Number of deals LIQUIDITY decreased by 12% and capital raised also registered a 40% decrease from the previous quarter.
The largest IPO of the quarter was HealthEquity Inc. (NASDAQ: HQY), which completed a $127 million IPO.
U.S. VC-backed IPO Activity (2011 - 2014) $9.00 40
$8.00 35
$7.00 30 $6.00 25 $5.00 20 $4.00 15 $3.00 10 $2.00
$1.00 5
$0.00 0 3Q'11 4Q'11 1Q'12 2Q'12 3Q'12 4Q'12 1Q'13 2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 Raised ($B) through IPO $0.43 $2.37 $1.42 $7.75 $0.81 $1.22 $0.64 $1.80 $2.22 $3.55 $2.94 $2.18 $1.30 Number of IPOs 11 10 20 12 10 8 9 20 25 20 38 25 22
18 VentureSource Top 3 U.S. IPOs (3Q 2014)
LIQUIDITY
Company Industry Industry Round Raised through Loca on Brief Descrip on Industry Code Close Date Exchange Name Segment Group Type IPO ($M)
Provider of a technology- Healthcare Medical So ware HealthEquity Inc. Draper, UT enabled services pla orm Administra on and Informa on Healthcare 7/31/2014 IPO $127.40 NASDAQ: HQY for the healthcare industry. So ware Services
Developer of gene therapies Avalanche for the treatment of sight- Biotechnology Biotechnologies Menlo Park, CA Biopharmaceu cals Healthcare 7/31/2014 IPO $102.00 NASDAQ: AAVL threatening ophthalmologic Therapeu cs Inc. diseases.
Developer of therapeu cs for the treatment of Otonomy Inc. San Diego, CA Drug Delivery Biopharmaceu cals Healthcare 8/13/2014 IPO $100.00 NASDAQ: OTIC diseases and disorders of the ear.
19 VentureSource Dow Jones VentureSource helps venture capitalists, corporate development execu ves, investment bankers and service providers find deal and partnership opportuni es, perform comprehensive due diligence and examine trends in venture capital investment, fund-raising and liquidity. It provides ABOUT US accurate, comprehensive data on venture-backed companies – including their investors and execu ves – in every region, industry and stage of development throughout the world.
The investment figures included in this release are based on aggregate findings of Dow Jones' proprietary research and are contained in VentureSource. This data was collected through surveys of professional firms, interviews with company execu ves, and from secondary sources. These venture capital sta s cs cover equity investments into early stage, innova ve companies and do not include companies receiving funding solely from corporate, individual, and/or government investors. Figures contained throughout the report current at me of editorial but are subject to change without no ce. No statement herein is to be construed as a recommenda on to buy or sell securi es or to provide investment advice.
About Dow Jones
Dow Jones & Company is a global provider of news and business informa on, delivering content to consumers and organiza ons via newspapers, Web sites, apps, video, newsle ers, magazines, proprietary databases, conferences, and radio. Dow Jones has produced unrivalled quality content for over 120 years and today has one of the world’s largest news-gathering opera ons with nearly 2,000 journalists in more than 80 bureaus, including The Wall Street Journal, America’s largest newspaper by paid circula on. Other premier brands include Barron’s, MarketWatch, DJX and Fac va. Dow Jones publishes in 13 languages and distributes content in 28 languages, combining technology with news and data to support business decision making. The company pioneered the first successful paid online news site and its industry leading innova on enables it to serve customers wherever they may be, via the Web, mobile devices, Internet-connected televisions, and tablets.
MEDIA CONTACT:
Erin Maier 212.416.4874 [email protected]
20