Q3 2013 sees VC deal count hit highest level since Q3 2001 (dot com boom). Exits also up with another solid quarter for venture-backed IPOs.

Venture capital financing in Q3 2013 gained momentum, as the 857 venture deals completed in the quarter was the largest figure of any quarter since the heady days of the dotcom boom. On the financing front, the $7.2 billion invested represented a third straight quarter of, albeit modest, increased funding by venture investors.

The exit environment for venture-backed companies in Q3 remained strong, as the 23 U.S.-based VC-backed IPOs marked the second consecutive quarter of 20+ VC-backed IPOs and an increase of 130% from the same quarter a year ago. Healthcare IPOs continued their momentum registering 13 in Q3 2013, following the 11 in Q2 2013.

To download the entire 77 page Q3 2013 Venture Capital Activity Report, login here. (note: The report is only available to paid CB Insights subscribers.)

q3vcfinancing

VC-backed IPO valuations on the rise

Overall, there were 135 VC-backed companies that exited in Q3’13 – 23 IPOs and 112 M&As. The 112 M&A exits represented a modest increase from Q1’13 and Q2’13 which logged 103 and 105 M&A exits, respectively. IPO valuations totaled $11.8B – the highest aggregate value of IPO exits in the last five quarters.

Among the five largest VC-backed IPO offerings of the quarter, tech companies took four led by cybersecurity firm FireEye, backed by Norwest Venture Partners and Sequoia Capital.

vcbackedexitsq3

Mobile sector has best quarter in history

On the back of several large deals (Uber, Kymeta, Flipboard), funding to the mobile sector hit $1.12B marking the first time mobile funding has crossed the $1B threshold in a quarter ever. Deal activity in the mobile sector also hit its highest quarterly mark in history, topping healthcare deal share for the first time.

mobileq3increase

Mobile gaming takes just 2% of funding to the mobile sector

Candy Crush Saga maker King may be gearing up for an IPO, but VCs are shying away from the mobile gaming industry. Mobile gaming companies saw just 2% of funding to the mobile sector in Q3.

Has NY finally overtaken Mass on deals and dollars?

New York has topped Massachusetts in overall share of VC dollars in two of the past three quarters. And NY has eclipsed Mass for deals for each of the past three quarters.

New York beats back the Series A Crunch

New York startups didn’t have to worry about a crunch in Q3. Both funding and deal share at the Series A stage hit five-quarter highs in Q3. On a sequential basis, NY’s Series A funding share jumped from 17% to a notable 43%, more than the combined funding of NY’s Series B and Series C deals.

The golden age of Silicon Valley financing

Silicon Valley’s share of funding compared to SoCal rose to a five-quarter high with the Valley now taking more than 8 out of 10 VC dollars to Cali companies.

Ring the alarm – clean tech VC implodes

It’s hard to put lipstick on this situation. Back in Q1’10, venture investments in Clean Tech hit $1.3B.  Now the sector is a shell of what it used to be with Clean Tech deal and funding falling to multi-year lows registering only $321 million of investment across 33 deals.

cleantechfinancingq3

The entire report breaks down the financing and exit numbers by geography, stage and industry.

To download the entire 77 page Q3 2013 Venture Capital Activity Report, login here. (note: The report is only available to paid CB Insights subscribers.)

  • http://www.ricfulop.com/ Ric Fulop

    Kudos to CB on another solid report. It would be interesting to look at historical data from the 90s and 80s see if there are any similarities with how prior cycles developed at a macro level vs this one.

  • http://www.cbinsights.com/ CB Insights

    Hi Ric — Thanks for reading, for the the kind words on the report and the comment.
    One of the interesting things about venture in our view is that “this time it’s different” holds as there are dynamics at play now that there is no historical precedent for.

    For example, seed VC funds (or micro-VCs). They along with larger funds that do seed deals are what is causing the rise in the # of investments. That’s a new phenomena as previously, $500k would not get you very far and so those types of deals didn’t happen.

    Couple this with shrinking VC asset class, rise of corporate investors and non-VC money (lots of Asia money flowing to startups now), and you have lots of variables that are different. So guess, in short, we’re not sure there are any patterns that will match history.

    One thing we’ve talked about and issued some data on is the coming Seed VC fund crunch as there seems to be too much seed money chasing too many seed deals. Here’s that data -

    http://www.cbinsights.com/blog/trends/seed-venture-capital-funds

    What do you think? Is there some period historically that you think parallels today? Would love to hear your thoughts.