According to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters, venture capital firms invested $9.9bn in 1,023 deals in the third quarter of 2014.
Quarterly vc investment declined 27% in terms of dollars and 9% in the number of deals, compared to the second quarter when $13.5bn was invested in 1,129 deals.
More than $33.0bn were invested through the first three quarters, overcoming total venture investing in all of 2013, which totaled $30.0bn.
The software industry continued to receive the highest level of funding, despite being down for the quarter. Venture capitalists invested $3.7 billion during the third quarter of 2014, down 39 percent compared to the second quarter when total venture investment into the industry reached $6.1bn. It also counted the most deals at 418, down 8% compared to the second quarter of 2014, due in part to a massive $1.2bn investment in a transportation software company in Q2. The Media and Entertainment industry was the second largest industry for dollars invested with $1.8bn going into 118 deals, rising 23% in dollars invested but declining 5% in total number of deals. Part of the increase in dollars can be attributed to three of the top 10 largest investments of the quarter falling into the Media and Entertainment category, including the largest deal, a $500m investment. Investments in the third quarter in the Life Sciences sector (Biotechnology and Medical Devices combined) fell 35% in dollars and 6% in deals when compared to the second quarter. The Biotechnology industry captured the third largest total during the quarter with $1.1bn going into 110 deals, down 43% in dollars invested and 10% in deals from the prior quarter. The Medical Devices and Equipment industry also experienced a decrease in dollars compared to the second quarter, falling 13% in dollars to $586m invested into 78 deals in Q3 – the same number of deals as the prior quarter. Ten of the 17 MoneyTree industries experienced decreases in dollars invested in the third quarter, including Financial Services (58%), Industrial/Energy (28%), and Consumer Products and Services (19%).
Seed stage investment was down 5% in dollars and 16% in deals with $197m invested into 48 deals in the third quarter. Early stage investment was down 22% in dollars and 3% in deals with $3.0bn going into 511 deals. The average Seed stage deal in the third quarter was $4.1m, up from $3.6m in the second quarter of 2014. The average Early stage deal was $5.8m in Q3, down from $7.3m in the prior quarter.
Expansion stage investment was down 45% in terms of dollars in Q3, with $3.4bn going into 264 deals. The average Expansion stage deal was $13.0m, down from $19.8m in Q2 2014. Investments in Later stage companies increased 3% to $3.3bn going into 200 deals in the third quarter, the largest quarterly total of dollars invested in Later stage companies since Q3 2007. The average Later stage deal in the third quarter was $16.7m, up from $14.0m in the prior quarter, attributable in part to six of the 10 largest deals in Q3 falling into the Later stage of development. First-time financing (related to companies receiving venture capital for the first time) dollars decreased 8% to $1.6bn in Q3 while the number of deals was down 5 percent from the prior quarter, dropping to 337. First-time financings accounted for 17% of all dollars and 33% of all deals in the third quarter.