Bubble or not?

According to Preqin, the amount of capital invested by venture capital fund managers in young companies reached $87bn in 2014, over 58% more than the capital invested in 2013.

Over the past year, a total of 7,474 venture capital financings were announced globally with an aggregate value of $86.6bn. This represents an 11% fall in the number of financings taking place compared to 2013, but a 58% rise in the aggregate value of deals compared to the previous year. Companies located in Asia and other regions outside North America and Europe have been the primary benefactors of this increase in financing, with the amount of capital invested across these regions up 160% in 2014 compared to deals done in 2013.

Venture Capital

Other Key Venture Capital Deal Market Facts:

Although North America was again the most prominent region for venture capital investment with 4,594 venture capital deals in 2014 valued at a total of $53.9bn, these deals accounted for the lowest annual proportion of overall deal number and value in the period 2007-2014.

  • Europe saw an 18% decrease in number of deals, from 1,729 in 2013 to 1,416 deals in 2014, with a slight increase in aggregate deal value from $9.1bn to $9.2bn.
  • The number of investments in Greater China increased by 15% from 437 in 2013 to 504 in 2014, coupled with a 212% increase in aggregate value, with deals in 2014 valued at $12.8bn.
  • In 2014, the number of deals in India increased by 14% with the aggregate value witnessing an increase of 217% to $5.4bn. The number of deals in Israel fell by 30% to 130, but aggregate value rose by 61%.
  • Series D and later stage deals globally witnessed a 100% increase in average value to $66.9mn, the highest for this category of deals in the period 2007-2014.
  • The venture capital industry has witnessed a noticeable improvement in recent performance, with average venture capital fund returns in the year to June 2014 reaching 25.9%, higher than any other private equity fund type.
  • Out of the top 10 largest venture capital deals done in 2014, five were based in the US, two in China and three in India.
  • Uber Technologies Inc. received the two largest venture capital financing rounds in 2014, with a $1.2bn Series D investment in June and a $1.2bn Series E investment in December.

Venture Capital

Comment:

“While North America maintains the top spot in terms of activity within the venture capital investment space, the talking point this year is certainly Asia. The region has seen significant growth in deal activity throughout 2014, particularly in terms of the amount of capital being invested in entrepreneurial companies. Moreover, five of the top 10 largest venture capital investments over the year were in China and India.

Venture Capital

Across the globe, it is encouraging to see such a significant increase in the amount of capital being invested in young, innovative companies. With the performance of the asset class also improving for many recent fund vintages, many investors are looking to put more capital to work in venture capital funds. This is likely to encourage even greater levels of venture capital financing in the year to come.”

Christopher Elvin, Head of Private Equity Products – Preqin