Investors are Writing Larger Checks Across Almost All Technology Sectors

Deal and funding activity hit dot com level highs in Q2 2014 with a lot of the growth being driven by technology financings. Deal count has grown as a result of a continued frenzy in early stage deal activity and the rise in funding has been driven by mega-financings which have become very common.

Using CB Insights data, we wanted to understand if certain sectors are driving the funding growth or is this just a case of a rising tide helping all technology sectors?  Note: we specifically looked at internet, mobile, software, computer hardware and electronics (chips & semis)

Here’s what the data says:

• As we compare ’09 vs. ’14, virtually all sectors have seen early, mid-stage and late-stage deal sizes grow.
• The one exception is electronics which has seen mid and late-stage deals sizes actually contract. This is not surprising given the malaise that has existed in the chips & semiconductor space for some time.
• At the early stage, mobile deal sizes are showing the largest uptick in deal sizes.
• At the mid stage, internet companies are showing the biggest increase in deal size.
• At the late stage, three sectors (internet, hardware and non-internet/mobile software) have seen deal size growth of over 100%+.

Early stage investment sizes have been increasing almost universally across tech with mobile showing the largest increase vs. 2009.  The lone exception was a decline in deal sizes for the electronics sector between 2009 vs. 2013.

While Hardware has not had a significant increase in deal size since 2009, it still had the highest median deal size of $13.13M compared to the other sectors. Electronics pulls up the rear again with deal sizes down vs 2009. In fact, since 2011, median deal sizes have declined and hit their lowest coming in at $6.1 million in the first half of 2014.

For late stage rounds, Internet companies are seeing the largest financings. Three sectors (internet, computer hardware and traditional software) are seeing 100%+ growth in deal sizes vs 2009.  Electronics, again, remains flat unable to participate in the late stage funding boom seen across all other tech sectors.

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