Business

Venture Capital Investment Hits Record $34bn In Q2 2015

Venture Capital Investment Climbs To $34bn In Q2 2015 by Preqin

The amount of capital invested in entrepreneurial companies globally by the venture capital industry hit a record $34bn in Q2, up from $29bn in the first quarter of 2015.

The venture capital industry has had a very strong start to 2015. Not only is the fundraising market buoyant, but venture capital fund managers have invested a record $63.0bn over the first six months of the year. This is 48% more than the amount of capital invested through the first half of 2014, and 145% more than the amount of capital invested in Q1 and Q2 2013. Yet the number of investments taking place is down significantly. A total of 1,876 venture capital deals took place globally in Q2 2015, down from 1,913 in the first quarter (a total of 3,789 in H1). This compares to a total of 4,648 deals in H1 2014, or 18% fewer deals.

Venture Capital

Other Key Venture Capital Deal Market Facts:

  • Aggregate deal value for Q2 2015 is $33.7bn, which is 39% higher than at the same point last year ($24.2bn), despite the number of deals this quarter reaching 1,876, 23% lower than the 2,429 deals in Q2 2014.
  • The number of deals in North America has fallen 4% in Q2 2015 from the previous quarter, from 1,030 deals to 992, but with a 4% increase in value.
  • Europe has witnessed a drop in deal number but a rise in value; 284 deals valued at an aggregate $3bn in Q2, representing a respective 20% drop and 6% increase from the last quarter.
  • There has been a 25% increase in deal flow in India from 162 financings in Q1 2015 to 202 in Q2 2015.
  • The average value of angel/seed financing rounds so far in 2015 is $1.4mn, 18% higher than the average in 2014 and the highest average value since 2007.
  • The largest venture capital deal in Q2 2015 was $1.5bn investment in Airbnb by a consortium of investors. This was followed by the $1bn investment in South Korea-based Coupang by Softbank.
  • A total of $13.9bn was raised by venture capital funds that closed in Q2 2015, up from the $9.5bn raised by funds that closed over the first quarter.
  • Venture capital dry powder (capital available for investment) currently stands at $141bn globally, up from $121bn as of the start of the year.

Venture Capital

Comment:

“Venture capital financing has had a particularly strong start to 2015. Almost $34bn was invested in companies worldwide in the second quarter, which brings total investment in entrepreneurial companies to $63bn over the first half of the year. However, there has been a notable drop in the number of transactions taking place. The number of transactions is down compared to the first quarter of the year, and has in fact been falling consecutively each quarter since Q2 2014. This in turn is driving up the average size of deals, and with fund managers sitting on a large amount of capital to spend, there might be slight concerns that valuations for forthcoming investments are becoming inflated.”

Venture Capital

Christopher Elvin, Head of Private Equity Products – Preqin