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Software deals netted out 42% of all dollars invested in the first quarter, with biotechnology receiving 11%. VCs invested $816M in IT Services or 9% of all dollars, making this the third largest investment category. Interest in IT Services continues to accelerate, with dollars invested in this category increasing 33% compared to the prior quarter.
These findings are from the latest edition of The MoneyTree Report, a quarterly study of venture capital investment in the United States produced by
Take-Aways From The Study
- A total of $9.5B in 951 deals was invested in the first quarter of this year, up 12% in dollars and down 14% in the number of deals compared to the 4th quarter of 2013. In the previous quarter, a total of $8.4B was invested in 1,112 deals.
- Software companies received three times the number of deals of the next closest industry category, Media & Entertainment. 46% or 126 software deals were completed in Q1, compared to 40 in Media & Entertainment. Biotechnology companies were third with 8% or 22 deals. The following graphic provides a comparison of deals by industry for Q1, 2014. Please click on the graphic to expand it for easier reading.
- Software’s dominance relative to other industries is evident in the following graphic, showing 42% of dollars invested followed by biotechnology (11%) and IT Services (9%). The study data shows nine of the 17 industries are shrinking it terms of venture investments. Telecommunications is down 68%, Networking and Equipment down 47% and semiconductors, down 17%. Please click on the graphic to expand it for easier reading.
- Overall first-time financing decreased 25% to $1.2B in Q1, with a corresponding 24% drop in the number of companies to 271.
- 48% of dollars invested during Q1 into companies receiving venture capital for the first time are in the software industry. 46% of the deals to 126 companies who captured $571M in Q1 lead to this industry dominating first sequencing investments.
- Top regions where startups received funding in Q1 include Silicon Valley (50% of all VC funding), New England (11%) and the New York Metro Area (10%). The Los Angeles/Orange County area was fourth with 5% of all venture funding in Q1, 2014.