Venture-capital activity is continuing to slow down, based on data from our Q1’15 VC report. The number of VC deals hit a low in Q1’15, marking the third straight quarter of deal decline, dropping to just above 805 deals, from 943 the previous quarter. Q1’15 also saw an 18% drop in funding from the previous quarter, from $13.7B to $11.3B but it was also the fifth straight quarter to break $10B in investment.
Though VC deals might be decreasing, this doesn’t tell the full story. When we look at the investment into VC-backed companies (the companies that at some point have received VC-firm funding), Q1’15 reached a new high in funding of $17.7B, a growth of 13% from the previous quarter and the second straight quarter of funding growth. That’s because late-stage investors like mutual funds, sovereign wealth funds, private equity, and corporations etc. are dumping more dollars into VC-backed companies. Many of those investments are concentrated in individual mega-deals. Even though more dollars are going into these companies, the overall trend in the number of deals still points downward.
Below is further evidence of how late-stage investors are driving funding trends. VCs are slowly shifting investments away from late-stage deals, as deeper-pocketed investors are ready to provide more funding. Late-stage investments are accounting for a lower share of overall VC investments. The dollar-share for late-stage VC deals hit a low of 40% in Q1’15, with Series E+ shrinking from 30% in Q4’14 to 22% in Q1’15. Megadeals in Uber, Snapchat, and Lyft all lacked VC participation, further driving this trend. Data from comes from our Q1’15 VC report, which can be downloaded here.
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