Venture Capital’s Best Year Since 2000: $48.3B

U.S. venture capital just had a huge year — in fact, 2014 was the biggest year for VCs since 2000, VentureBeat reported.

Venture capitalists invested $48.3 billion in 4,356 U.S. deals last year — a 61 percent jump in dollars and a 4 percent increase in the number of deals from 2013 — and most of that money went to Internet-specific and software companies, according to the latest MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association, using data from Thomson Reuters.

It was also the first year in the report’s history with two deals that exceeded $1 billion each.

Internet-specific companies, which PwC and the NVCA define as being fundamentally dependent on the Internet regardless of their primary industry, raised a total of $11.9 billion in 2014, or 25 percent of the total VC money for the year. Software companies raised $19.8 billion, 41 percent of the total. In each case it was the highest level of investment for the category since 2000.

Money seems to have shifted away from seed funding and into more advanced investment stages. Seed deals were 3 percent of the dollars and 6 percent of the deals in 2013, but they dropped to 1 percent of the dollars and 4 percent of the deals in 2014. The 192 seed deals, worth a total of $719 million, represented the smallest number of seed deals since 2002.

But expansion-stage deals grabbed the most dollars in 2014 — $19.8 million — for a 102 percent increase since 2013. Early-stage companies got the highest number of deals at 2,165, for a total of $15.8 billion.

Other key figures from the report:

  • There were more than 40 megadeals (investments worth more than $100 million).
  • Industry sectors with the biggest dollar increases for 2014 included Retailing/Distribution (up 265 percent), Computers and Peripherals (up 132 percent), Electronics/Instrumentation (up 128 percent) and Financial Services (up 109 percent).
  • Companies raising venture capital for the first time increased 47 percent in dollars, totaling $7.4 billion.
  • 68 percent of first-time deals were in early-stage companies, followed by 14 percent in expansion-stage companies.

European companies, which typically lag the U.S. in venture funding, didn’t have such a big year, but it still wasn’t bad: For example, startups in London and Berlin posted at least double-digit annual growth in VC investment in 2014.