The U.S. is on pace for $70B in VC investing this year

Steven Loeb · August 18, 2015 · Short URL:

There has already been nearly $60 billion invested in 3,668 deals around the globe this year

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Memo to startups: this is a really, really good time for you to look to raise money. Venture capital is on the rise in a big, big way and investments are on track to be the highest they've been in years, if not ever. 

In the first half of this year, there has already been nearly $60 billion invested in 3,668 deals according to the Venture Pulse Q2 '15 report from KPMG International and CB Insights, which was released on Tuesday.

In 2014, more than $88 billion was invested, an 88% increase from the $49 billion invested in 2013. And now that number is on track to be surpassed; if 2015 stayed on this track it will see $120 billion invested, a 37% increase year-to-year.

Over $32 billion of the money that was invested, came during the second quarter of 2015, in 1,819 deals. That was the third straight quarter of more than $27 billion invested.

Interestingly, despite the huge amount of money, deal activity isn't seeing the same increase. Deals in 2015 are on pace to reach similar levels as 2014, which saw 7,485. This year is on pace to see a decline to 7,336.

Q2’15 also marked the third consecutive quarter of declining deal activity, though it was still the fifth straight quarter with more than 1800 total deals, so at least there's that. 

The reason for this is that seed and deals have been declining for the last three quarters, going from 34% of all deals in the third quarter of 2014, to only 28% in the most recent quarter. Meanwhile, mid-stage deals, in the Series B and C round, have increased in the past two quarters, taking more than a fourth of total deals in this past quarter.

When broken down by sector, Internet companies take nearly half the deals, with 48%, and when combined with the 15% for mobile & telecommunications, they take 65%. Healthcare only took 12% of global deals.

Investing in the U.S.

As good as things are looking around the globe, they are even better in the United States.

Venture Capital hit a record high of $56.4 billion invested in 2014, up 59% from $36.5 billion invested in 2013, and now the U.S. is on track to break that record with more than $70 billion this year. At this rate, North America is on pace to top 2014’s by over 25%.

This last quarter saw the most invested in over four years, with $19 billion invested. The U.S. has seen more than $15billion invested in four of the last five quarters, including more than $18 billion in both so far this year. Though deals in the firs quartert dropped to their lowest point since 2013, they saw a small uptick in in the second quarter of this year. 

Yet, again, the number of deals dropped 9% year-to-year. And, again, the U.S. is following the same trend as the global VC market with a decrease in the percentage of seed deals, from 33% in Q3 2013 to 25% in Q2 2015.

In the latest quarter, mid-stage deals took more than a quarter of all deals for the first time in five quarters.

Late stage deals seemed to be biggest driver of dealflow, with the top 6 rounds totalling over $3.5 billion, or over 18% of funding in North America. They were:

  • Airbnb, which raised $1.5 billion, tying it with Facebook for the largest VC funding round of all time in the United States.
  • Zenefits, which raised a $500 million Series C round
  • Wish, which also raised a $500 million round
  • WeWork, which raised $434 million 
  • SnapChat, which raised $337 million
  • Affirm, which raised $275 million

Mega rounds

We've covered the rise of so-called "unicorn fever," and now we can see the effect these mega rounds, d their mega valuations, are having on the VC landscape.

So far there have been over 100 rounds of at least $100 million equity financings to VC-backed companies, with 61 of them coming in the second quarter. Asia saw 25 of those investments, up from 16 the quarter before, and 13 the same quarter the year prior.

Overall the mega-rounds last quarter raised over $16 billion.

These huge deals have led to a rash of unicorns, with 12 new ones in U.S. in the second quarter of 2015 alone, up from six the quarter before, including Zenefits, Oscar Health Insurance and MarkLogic. There were nine of them in Asia.

Already this year, 35 venture capital backed companies have achieved billion-dollar valuations, including Lyft, Domo Technologies, Zomato Media and BeiBei.

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