Dow Jones VentureSource 2Q’14 U.S. Venture Capital Report

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 2Q 2014 include:

- U.S. venture capital fundraising amount raised and number of funds on decline from 1Q 2014; Venture capital investment was at its highest since 1Q 2001;
- Median pre-money valuation totaled $58M, more than double the valuation figure for 1Q 2014;
- Amount raised and transactions on decline for both venture-backed mergers and acquisitions (M&As) and Initial public offerings (IPOs).

FUNDRAISING

Venture Fundraising in U.S. on decline from 1Q 2014

76 funds garnered $7.4 billion in 2Q 2014, down 28% from the amount raised in the previous quarter. Number of funds also experienced a 5% decrease.
Tiger Global Private Investment Partners VIII LP was the largest U.S. venture capital fund of 2Q 2014 raising $1.5 billion and accounting for 20% of the total amount raised during the quarter.
Median U.S. fund size was $172 million in the first half of 2014.

FINANCING

U.S. Venture Investment on the Rise in 2Q 2014

U.S.-based companies raised $13.8 billion from 917 venture capital deals during 2Q 2014, a 21% and 4% increase both in capital and deal count from the previous quarter.
Compared to the same period in 2013, amount invested registered a 60% increase, while number of deals dipped 2%.
Consumer Services and Business and Financial Services were the strongest sectors, respectively with 28% and 24% share of total amount invested.

Equity Financings into U.S.-based, VC-backed Companies, by Industry Group (2Q 2014)

Consumer Services saw the largest investment allocation, with 171 deals garnering almost $3.9 billion and accounting for 28% of total equity investment.
The Business and Financial Services sector raised the second highest proportion of investment for 2Q’14 - $3.3 billion into 242 deals, up 4% and 9% in dollars and deals, respectively, from 1Q’14 figures.
IT and Healthcare shared third position. IT decreased 13% quarter over quarter, with $3 billion invested in 236 deals, a 4% drop also for the number of deals. The sector’s investment figure represents a 22% share of total equity investment into U.S. VC-backed companies for the quarter.
Healthcare companies raised $3 billion across 201 deals, a 33% and 18% increase compared to the previous quarter.

LIQUIDITY

Venture M&A and IPO Market Activity in the U.S. during 2Q 2014

Mergers and acquisitions (M&As) of venture-backed companies in 2Q 2014 decreased by 26% in value from those completed in 1Q 2014, with 108 deals garnering $12.6 billion.
25 venture-backed IPOs took place during 2Q 2014, a 34% decrease from the previous quarter.

U.S. VC-backed M&A

108 M&As of venture-backed companies in U.S. garnered $12.6 billion during 2Q 2014.
In contrast with 1Q 2014, when a total of 128 transactions accumulated almost $17 billion, both number of M&As and amount raised fell by 16% and 26% respectively.
The largest M&A of the quarter was Oculus VR Inc., which was acquired by Facebook Inc. (Nasdaq: FB) for $2 billion.

U.S. VC-backed IPOs 

25 venture-backed companies raised almost $2.2 billion through public offerings in 2Q 2014. Number of deals decreased by 34% and capital raised also registered a 26% decrease from the previous quarter.
The largest IPO of the quarter was GoPro Inc. (NASDAQ:GPRO), which completed a $427 million IPO. 

Dow Jones VentureSource 2Q’14 Europe Venture Capital Rep

VentureSource

The following report presents Dow Jones VentureSource’s quarterly findings for European venture capital fundraising, investment, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market.

Highlights for 2Q 2014 include:

- European venture capital fundraising rallied from customary first quarter decline to match 2Q 2013;
- Venture capital investment into European companies improved to reach highest quarterly investment figure since 3Q 2001;
- Despite a slide in mergers and acquisitions (M&As), overall exit activity improved from the previous quarter due to the highest number of initial public offerings (IPOs) in a quarter since 4Q 2006.

FUNDRAISING

European Venture Capital Fundraising Rallies in 2Q 2014

20 European venture capital funds accumulated €1.03 billion during 2Q 2014, equating to an increase of 58% in euros raised from 1Q 2014 despite the number of fund closings remaining flat. Though level with 2Q 2013, the raised figure falls short of the €1.18 billion raised during 2Q 2012.
A total of €1.68 billion were raised by 40 European venture capital funds during the first half of 2014, representing a dip of 5% in euros raised despite fund closings increasing by 29% from the first half of 2013.
The largest fund of the quarter was Index Ventures’ VII LP fund which raised €400 million, and accounted for 39% of the total amount raised for 2Q 2014.

FINANCING

Investment into European Venture-backed Companies Improves in 2Q 2014

European companies raised €2.1 billion for 365 deals during 2Q 2014, an increase of 2% in the number of deals and 41% in capital raised from the previous quarter. 2Q 2014 enjoyed the highest quarterly investment figure since 3Q 2001 when €2.7 billion were raised.
In contrast with 2Q 2013 figures, despite deal flow decreasing by 10%, investment improved by 42%.
For the first half of 2014, European venture-backed companies drew in €3.6 billion in 723 deals, a decline of 5% in deals completed but a rise of 35% in euros invested from the first six months of 2013 .

Equity Financings into Europe-based, VC-backed Companies, by Industry Group (2Q 2014)

The Consumer Services sector received the largest allocation of investment during 2Q 2014 (37%), accumulating €788 million through 109 deals. While deal flow picked up by just 2% from 1Q 2014, sector investment rose by 76%. The five largest deals completed for the quarter were all for companies in Consumer Services.
Business and Financial Services placed second in terms of equity financing, taking a 26% share of all 2Q 2014 investment. The sector raised €540 million across 108 deals, an increase of 33% in capital raised despite a 5% dip in deal flow. The sector’s investment total was the largest for a single quarter since 1Q 2001.
Healthcare remained third, with companies gathering 18% of the total amount invested during the quarter. The sector received €375 million across 52 deals, an uptick of 6% in both deal flow and capital invested from 1Q 2014.

Equity Financings into Europe-based, VC-backed Companies, by Country (2Q 2014)

The U.K. remained the favoured destination for equity financing in 2Q 2014 with a 28% share of investment into European VC-backed companies. The country received €598 million across 97 deals, an increase of 7% in deal flow and 58% in amount invested from 1Q 2014.
France placed second with a 19% share of investment. While deal flow saw an increase of 42% from 1Q 2014 with 74 completed, investment more than doubled from the €184 million drawn in during the previous quarter to reach €395 million.
Germany occupy third spot, raising €322 million, representing a 15% share of investment. The Netherlands rose to fourth spot with an 8% share, raising €166 million during 2Q 2014. It was the country’s highest quarterly investment total since 3Q 2000.

LIQUIDITY

Venture Exits in Europe See Overall Increase in 2Q 2014 Despite M&A Slide

38 venture-backed M&As took place in Europe during 2Q 2014, a decline of 19% from 1Q 2014 but an uptick of 6% from 2Q 2013.
The largest M&A of 2Q 2014 was Crossknowledge Group Ltd., a corporate e-learning service provider, which was acquired by John Wiley & Sons for €127 million.
19 venture-backed IPOs took place during 2Q 2014, 11 more than in 1Q 2014 and the most since 4Q 2006. Companies raised €407 million for their listings during 2Q 2014, a slight decline from the €449 million seen in 1Q 2014. 

DJ VentureSource China -- 2Q 2014

China -- 2Q 2014

The following report presents Dow Jones VentureSource’s quarterly findings for Chinese venture capital fundraising, investment, and liquidity. The included charts and graphs offer a comprehensive view of the trends currently affecting the venture capital market
.
Highlights for 2Q 2014 include:

- Chinese venture capital fundraising reached its highest level since 4Q 2011 with the highest number of fund closings since 4Q 2012;
- Quarterly venture investment continued to rise, with deal flow and dollars invested surpassing both 1Q 2014 and 2Q 2013 levels;
- While venture-backed mergers and acquisitions (M&As) picked up, initial public offerings (IPOs) fell substantially from the flurry of listings completed during 1Q 2014.

FUNDRAISING

Chinese Venture Capital Fundraising Experiences Significant Gains in 2Q 2014

Chinese venture fundraising rose to $3.06 billion across 13 funds during 2Q 2014. The quarter represents the highest fundraising accumulation since 4Q 2011 and the most number of funds since 4Q 2012.

Venture fundraising for the first half of 2014 compared very favourably to 2013’s equivalent period with $4.27 billion raised across 19 venture capital funds. This equates to a 58% rise in the number of fund closings and over three times the amount accumulated during the first half of last year.

IDG Capital Partners’ China Venture Capital IV fund was the largest of 2Q 2014, raising $586 million and accounting for 19% of the total amount for the quarter.

FINANCING

Venture Capital Investment in China Continues Rise in 2Q 2014

Investment into Chinese venture-backed companies continued to improve in 2Q 2014, as companies raised $2.8 billion from 121 deals, equating to a 13% increase in the number of deals and a 19% improvement in capital invested from the previous quarter.

Compared with 2Q 2013, deal flow improved by 38% while investment doubled.
Investment for the first half of 2014 dwarfs that of the equivalent 2013 period, with $5.1 billion raised compared with a little over $2 billion. Similarly, deal flow has also risen, from 151 to 228, equating to a 51% increase 

Report disputes Yellen's biotech concerns

Despite the stir caused by recent comments by Federal Reserve Chair Janet Yellenregarding the state of the biotechnology sector, Kalorama Information sees potential for growth based on the substantial investments in venture capital that came into the biotech market in 2012-2013. Kalorama's Biotech Funding Deals and Partnerships notes that biotech investment has increased significantly in the past few years and that 2013 saw a noticeable spike. In the last few years, this has resulted in a complex series of deals and transactions involving major players in the industry, as investors invest in proven companies on new science and technology initiatives that have potential in the clinic. 

Fed Chair Janet Yellen commented regarding the biotechnology sector in testimony to Congress on July 15th(http://www.federalreserve.gov/monetarypolicy/files/20140715_mprfullreport.pdf), stating that "valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year."  This comment has been much discussed in the media, and some media outlets and business pundits have questioned whether the comments have affected biotechnology stocks. 

The healthcare market research firm notes that the statement did not take into account information from venture capital markets, which have for the most part backed biotechnology. 

"While Federal Reserve Chair Yellen's comments were directed at equity markets, venture capital spends are another way to judge a sector's merit," said Bruce Carlson, Publisher of Kalorama Information.  "One out of every eight dollars invested in companies is invested in biotech.  For key players in the biotechnology sector, the landscape for investing remains fertile."

Kalorama's Biotech Funding Deals and Partnerships notes significant transactions from 2011 to 2014 involving major companies such as Alkermes, Boston Biomedical, Dicerna Pharmaceuticals, immatics biotechnologies, Micromet, Reata Pharmaceuticals, UCB and Xoma. This report reviews the nature and direction of funding trends, and outlines the important role that investments play in moving technology into the marketplace.

Kalorama Information's report, Biotech Funding Deals and Partnerships: Analysis of Recent Venture Capital and Corporate Capital Funding and Other Transactions, provides analysis of both venture and corporate capital funding efforts. In addition, the report looks at other collaborative approaches, including licensing, joint ventures and partnerships aimed at moving product candidates into the marketplace as approved therapies, especially if they address unmet medical needs. The report can be found at KI:http://www.marketresearch.com/redirect.asp?progid=86478&url=http%3A%2F%2Fwww%2Ekaloramainformation%2Ecom%2FBiotech%2DFunding%2DDeals%2D8169354%2F