U.S. venture investments stay hot in Q3

$19 billion raised across nearly a thousand deals, according to Dow Jones VentureSource

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It was another record quarter for venture capital (VC) investments in the United States.

Companies raised $19 billion across 931 VC deals, according to Dow Jones VentureSource, amounting to a 3% increase in capital and 11% increase in deals compared to the quarter previous. Compared to the same quarter a year ago--which, in the chart below, looks like a stunted anomaly next to every quarter following it--capital went up 68% and deals decreased by 5%.

Notably, two companies are alone responsible for raising over 10% of all capital raised last quarter.

Peer-to-peer lending company SocialFinance and ride-hailing unicorn Uber each raised monster $1 billion rounds in the third quarter, the former to delay its IPO ambitions and the latter to aggressively expand internationally. (It’s worth noting that the frequency with which rounds of this size have occurred makes me wonder whether we should change the definition of a monster round.)

Uber specifically has stated it would be using its $1 billion investment to expand in India, where the company just this week won a small regulatory victory.

Rounding out the top five VC deals were Fanatics (which raised $300 million from Silver Lake Management), DraftKings (which raised $300 million from a long list of backers including Major League Baseball and Major League Soccer), and GitHub (which raised $251 million from Andreessen Horowitz, Institutional Venture Partners, Sequoia Capital, and Thrive Capital).

Though business and financial services companies raised the highest allocation of investments ($5.3 billion over 234 deals, or 28% of the pie), the money appears to be fairly distributed across other industries as well, including IT, healthcare, and industrial goods and materials.

As for the the most active investors in VC-backed companies, it was the usual suspects: New Enterprise Associates (NEA), Accel Partners, Kleiner Perkins Caufield & Byers (KPCB), Intel Capital, and Sequoia Capital.

An interesting counterpoint to the continued growth in VC investments is the fact that VC fundraising decreased fairly significantly in the third quarter. In total, 67 funds (down 32% from Q2) raised $4.71 billion (down 64%).

In fairness, Q2 2015 was a record quarter for VC fundraising, but we haven’t seen fundraising this low since the fourth quarter of 2013.

The top five largest VC funds for the quarter were: Deerfield Healthcare Innovations Fund ($550 million for early-stage investing), Foresite Capital Fund III LP ($450 million for late-stage investing), Insight Venture Partners IX LP ($390 million for late-stage investing), Foundry Venture Capital 2016 LP ($225 million for early-stage investing), and Arboretum Ventures IV LP ($220 million for early-stage investing).

Taken in total, the latest figures from VentureSource throw more weight behind the global trend: VC investing has reached incredible new heights. As we reported yesterday, in the first three quarters of 2015 alone there has been $98.4 billion invested, more than the $88.7 billion in all of 2014. Number of deals is decreasing across the board, however, indicating a rise in average investment size per deal.

The Los Angeles Metro Area

Seeing as how Vator is hosting its latest Splash event in LA tomorrow, we thought it would be fitting to include information on the VC market in that rapidly growing tech market.

In total, nearly $567 million of venture capital was invested in LA-based companies in the third quarter, a drop from the $885 million netted in Q3 2014. Already, however, investments for the year have topped total investments for last year, and we're not even in the fourth quarter yet.

Top deals went to The Honest Company ($100 million raised), Flipagram ($70 million), InvestCloud ($45 million), Whip Networks ($43.5 million), Headspace ($34 million), and Thrive Market ($30 million), all of which (except InvestCloud) provide consumer services.