VC deals sink 38% in Q1; Exits plunge 40% from a year ago

Steven Loeb · April 6, 2016 · Short URL:

Venture capital firms have continued to raise capital, see biggest fundraising quarter in two years

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It certainly is now harder for companies to raise money than it used to be. While the fourth quarter of 2015 had already seen a slide, the bearish sentiment for venture investments continues unabated in the first quarter of this year.

Globally, there were 2,685 deals in Q1 of this year, down 38 percent from the same quarter in 2015, when there were 4.348 deals, according to data out from Pitchbook. But what's even more depressing is the number of exits.  

The number of exits fell 40 percent year to year, from 435 in the first quarter of 2015 to only 261 this past quarter. Capital exited fell 24.5 percent, from $16 billion to $12.4 billion.

The overwhelming majority of those exits were acquisitions, 212 of them, or 81 percent. There were only 13 IPOs and 36 buyouts.

Dollar amounts stay steady

VC investments were also down 18.5 percent quarter-to-quarter, the same amount that deals dropped in Q1 2015. In Q1 2014 they went up 3 percent, while in Q1 2013 they only went up by less than 1 percent. 

While the number of companies getting money is way down, the number of dollars actually have not really been affected. There was $30 billion invested in the quarter, down only 6 percent from Q1 2015, but also up 13 percent from Q4 2015, when $26.6 billion was invested.

As such, the median deal size increased from $1.6 million in Q1 2015 to $2.3 million in Q1 2016.

These numbers make a lot of sense when you also look at the VC fundraising numbers. While the down market may be making investors more skittish about which companies they invest in, they still have a lot of money to throw around. 

In the first quarter of 2016, 90 funds closed, down 3 percent year over year, but they raised a total of $16.7 billion, an increase of 27.5 percent, with a median fund size of $77.3 million, up a whopping 66 percent from $46.6 million in the first quarter of 2015.

That $16.7 billion is the most since at least the beginning of 2014.

Some of the big fundraisings in the quarter included General Catalyst, which raised an $845 million fund, and Battery Ventures, which was able to raise $950 million, in February. In March, Lightspeed Venture Partners raised $1.2 billion across two funds.

The biggest so far has been Accel Partners, which raised $2 billion across two funds. That number is not far off from the record VC fundraising, which is $2.8 billion, raising by New Enterprise Associates for its fifteenth fund last year. 

These numbers are coming off of a 2015 that the best year for VC fundraising since 2006, with $35.5 billion in total capital committed to VC funds.  

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