Dow Jones VentureSource’s Venture Capital Report U.S. 1Q 2015

U.S. | 1Q | 2015

The following report presents Dow Jones VentureSource’s quarterly findings for U.S. venture capital fundraising, investment, valuation, and liquidity. 

Highlights for 1Q 2015 include:

U.S. venture capital fundraising decreased both in number of funds and amount invested;
Venture capital investment into U.S. companies experienced a minimal increase quarter-over-quarter ; Median pre-money valuation increased 29% from 4Q 2014;
Amounts raised through both Initial public offerings (IPOs) and mergers and acquisitions (M&As) experienced a decrease from the previous quarter.

FUNDRAISING 

Venture Fundraising Increases in U.S. during 1Q 2015 

• 56 funds garnered $8.1 billion in 1Q 2015, a 2% decrease in the amount raised, and also a 42% drop in number of funds from the prior quarter.
• Bessemer Venture Partners IX LP was the largest U.S. venture capital fund of 1Q 2015 raising $1.6 billion and accounting for 20% of the total amount raised during the quarter.
• Median U.S. fund size was $121 million in the first quarter of 2015.

U.S. Venture Investment in 1Q 2015 Registers Slight Improvement from 4Q 2014 

• U.S.-based companies raised $15.7 billion in 875 venture capital deals in 1Q 2015, a 1% rise in capital raised, however, the number of deals fell slightly (2%) from the previous quarter.
• Compared to the same period in 2014, amount invested went up 27%, while number of deals registered a 9% decrease.
• Healthcare and Business and Financial Services are the strongest sectors, respectively with 25% and 24% share of total amount invested.

Equity Financings into U.S.-based, VC-backed Companies, by Industry Group (1Q 2015) 

• Healthcare received the largest investment allocation during 1Q’15 (25%), accumulating $3.9 billion through 185 deals. The figures represent a respective increase of 50% and 19% from 4Q’14.
• The Business and Financial sector placed second in terms of equity financing, taking a 24% share of all 1Q’15 investment. 230 deals drew $3.7 billion, up 4% in capital raised.
• Consumer Services ranked third with almost $3.7 billion in 156 deals, dropping 17% from the $4.4 billion accumulated in the previous quarter. The sector’s investment figure represents a 23% share of total equity investment into U.S. VC-backed companies for the quarter.
• $2.8 billion were raised by Information Technology (IT) in 240 deals, a decrease of 26% in capital invested and 9% in deal flow.

LIQUIDITY 

Venture M&A and IPO Market Activity in the U.S. during 1Q 2015 

• Mergers and acquisitions (M&As) of venture-backed companies dropped 71% from 4Q 2014, with 104 deals garnering $9.9 billion.
• Initial public offering (IPO) activity decreased in 1Q 2015 raising $912 million, down 71% from the previous quarter.

U.S. VC-backed M&As

• 104 M&As of venture-backed companies in the U.S. garnered $9.9 billion during 1Q 2015.
• In contrast with 4Q 2014, when a total of 109 transactions accumulated almost $34 billion, both number of deals and amount raised decreased by 5% and 71% respectively.
• The largest M&A of the quarter was Flexus Biosciences Inc., which was acquired by Bristol-Myers Squibb (XNYS:BMY) for $1.25 billion.

U.S. VC-backed IPOs (2012-2015) 

• 12 venture-backed companies raised $912 million through public offerings in 1Q 2015. Number of deals decreased by 48% and capital raised registered a 71% drop from the previous quarter.
• The largest IPO of the quarter was Box Inc. (NYSE: BOX), which completed a $175 million IPO.

Dow Jones Venture Capital Report Europe 1Q 2015

The following report presents Dow Jones VentureSource’s quarterly findings for European venture capital fundraising, investment, valuation, and liquidity. 

Highlights for 1Q 2015 include: 

European venture capital fundraising down by a quarter from 4Q 2014;
Venture capital investment into European companies rose to highest figure since 3Q 2001;
Though exits via mergers and acquisitions (M&As) and initial public offerings (IPOs) rose slightly from the prior quarter, euros raised through IPOs shrunk to less than a fifth of the 4Q 2014 total.

 

 
FUNDRAISING 

European Venture Capital Fundraising Experiences Downturn in 1Q 2015

• 13 European venture capital funds accumulated €874 million during 1Q 2015, a decline of 25% in euros raised and 38% in the number of funds with closings from 4Q 2014.
• Despite the decline in fundraising from 4Q 2014, euros raised improved by 36% compared with the year ago period, despite the number of funds with closings falling by 43%.
• The largest fund of the quarter was HV Holtzbrinck Ventures Fund VI which raised €285 million, accounting for 33% of the total amount raised for 1Q 2015.

FINANCING 

Investment into European Venture-backed Companies Improves in 1Q 2015 

• European companies raised €2.6 billion for 345 deals during 1Q 2015, an increase of 41% in the amount raised from 4Q 2014 despite a 5% slide in the number of deals completed.
• In contrast with the year ago period, investment improved by 63% despite a 12% reduction in the number of completed deals.
• Consumer Services was the strongest sector of the quarter in terms of attracting investment with Business and Financial Services in second. The sectors garnered 50% and 17% of all dollars invested during 1Q 2015 respectively.

Equity Financings into Europe-based, VC-backed Companies, by Industry Group (1Q 2015)

• Consumer Services received the largest allocation of investment during 1Q 2015 (50%), accumulating €1.3 billion through 103 deals. Although deal flow remained relatively steady, sector investment quadrupled from the 4Q 2014 figure of €326 million.
• Business and Financial Services placed second in terms of equity financing, taking a 17% share of all 1Q 2015 investment. The sector raised €443 million across 82 deals, a decline of 26% in capital raised and 12% in deals completed from the previous quarter.
• Information Technology placed in third, with companies in the sector gathering 16% of the total amount invested for the quarter. The sector received €436 million across 75 deals; a rise of 65% and 1% from 4Q 2014 in capital invested and deal flow respectively.

Equity Financings into Europe-based, VC-backed Companies, by Country (1Q 2015) 

• Germany was the most favoured destination for equity financing during 1Q 2015, receiving €921 million across 64 deals. The country took 35% of all equity financing for the quarter, tripling its 4Q 2014 investment total.
• The United Kingdom placed second, attracting a 34% share of European financing. Investment rose by 54% from the prior quarter to total €886 million while deal flow increased by 16%.
• France occupies third position raising €292 million, 11% of the total for the quarter. Austria rose to fourth position with a 7% share, raising €173 million during 1Q 2015.

LIQUIDITY 

Europe Sees Improvement in 1Q 2015 Venture Exit Activity from Prior Quarter

• 49 venture-backed M&As took place in Europe during 1Q 2015, up 7% from 4Q 2014 but down 6% on the figure for 1Q 2014.
• The largest M&A for 1Q 2015 was Trophos SA, a developer of compounds for the treatment of neurological and cardiac diseases, which was acquired by Roche AG for €470 million.
• 12 venture-backed IPOs took place during 1Q 2015, two more than those seen in the prior quarter and four more than the listings for VC-backed companies completed in the year ago period.

European VC-backed IPOs

• 12 venture-backed IPOs took place during 1Q 2015, two more than those seen in the prior quarter and four more than the listings for VC-backed companies completed in the year ago period.
• IPOs raised €417 million during 1Q 2015, a decline of 81% from the $2.25 billion raised in 4Q 2014, which was the highest total for a single quarter since 2Q 2000. Compared to the year ago period, VC-backed companies raised 7% less through IPOs during 1Q 2015.
• The largest European VC-backed IPO of 1Q 2015 was Ascendis Pharma’s January listing on the NASDAQ. The company raised a total of €89 million, accounting for 21% of the total amount raised through European venture- backed company IPOs for the quarter.

Dow Jones Chinese Venture Capital Report 1Q 2015

FUNDRAISING 

Chinese Venture Capital Fundraising Improves in 1Q 2015 

• Chinese venture fundraising rose to $922 million across 6 funds during 1Q 2015, two and a half times the amount raised in 4Q 2014 albeit through three fewer funds.
• In comparison with the same period last year, dollars fell by 16% with the number of venture funds with closings declining by 40%.
• Banyan Partners Fund II was the largest of 1Q 2015, raising $362 million and accounting for 39% of the total amount raised in funds for the quarter.

FINANCING 

Venture Capital Investment in China - 1Q 2015 

Equity Financings into China– based, VC-backed Companies (2012 – 2015) 

• Chinese venture-backed companies raised more than $6.5 billion in 215 deals during 1Q 2015, a decline of 5% in capital invested and 21% in number of deals completed from 4Q 2014.
• Compared with 1Q 2014, however, dollars invested rose by more than two and a half times while deal flow improved by 56%.
• Consumer Services was the strongest sector of the quarter in terms of attracting investment with Business and Financial Services in second. The sectors garnered 67% and 21% of all dollars invested during 1Q 2015 respectively.

Equity Financings into China-based, VC-backed Companies, by Industry Group (1Q 2015) 

• Consumer Services companies took $4.4 billion through 94 deals during 1Q 2015, a rise of 17% in dollars invested from 4Q 2014 despite a 24% decrease in deals completed. The sector attracted 44% of all deals completed for the quarter and a 67% share of total amount invested.
• Business and Financial Services companies raised the second highest proportion of investment during 1Q 2015. The sector garnered $1.3 billion across 50 deals; over three times the dollars accrued in 4Q 2014 with a 25% improvement in deal flow.
• The Information Technology sector placed third for investment, receiving $524 million across 45 deals. Sector investment fell by 77% from 4Q 2014 while deal flow declined by 46%. The sector’s investment figure represents 8% of the total equity financing into China-based VC-backed companies for 1Q 2015.

LIQUIDITY 

Venture M&A and IPO Market Activity in China (1Q 2015) 

Exit Opportunities for Chinese VC-backed Companies

• Seven M&As were completed by venture-backed companies in China during 1Q 2015, one more than in the previous quarter and four more than in 1Q 2014.
• The largest M&A of the quarter was Hangzhou Songcheng Group’s acquisition of podcast services provider Six Rooms Holdings in March for $415 million.
• 21 VC-backed companies went public during 1Q in China, 50% more than in 4Q 2014 but 22% fewer than those completed in 1Q 2014.

Chinese VC-backed IPOs (2012-2015)

• 21 VC-backed companies went public during 1Q in China, 50% more than in 4Q 2014 but 22% fewer than those completed in 1Q 2014. Dollars raised through listings improved by 31% from the previous quarter to reach $1.7B, though the figure fell by 16% against the total amount raised during 1Q 2014.
• Beijing Kunlun Tech Co. Ltd. had the largest IPO of the quarter, raising $229 million for its January listing on the ChiNext. The online video game developer’s IPO represents 13% of the total raised through VC-backed IPOs in China during 1Q 2015.