Venture capital firms invested $47.2 billion in the first three quarters of the year, more than the full-year totals for 17 of the past 20 years, said the third-quarter MoneyTree Report, by the National Venture Capital Association and PricewaterhouseCoopers, based on data from Thomson Reuters.
Venture capital firms invested $16.3 billion in 1,070 deals in the third quarter of 2015, down 6% in value from $17.3 billion and down 11% by number of deals from 1,202 deals in the second quarter. However, the deal value is a 57% increase from $10.4 billion in 1,077 transactions in the third quarter of 2014, the report noted.
“While the third-quarter dollars are down … on an annual basis, dollars are measurably up,” said David Pakman, partner at technology-focused venture capital firm Venrock, in an interview. “2015 will probably be more (in dollar terms) than 2014.”
The 10 largest venture capital deals accounted for 19% of the capital invested in the third quarter, down from 24% of total dollars invested in the second quarter.
The largest deal was the $1 billion investment in peer-to-peer lender Social Finance Inc., San Francisco, by a group of venture capital firms including Baseline Ventures, Doll Capital Management, Institutional Venture Partners and Third Point Ventures, as well as Wellington Management.
Software companies received the largest amount of venture capital funding with $5.8 billion in 412 deals in the third quarter. Even so, total capital invested in software companies was down 21% while the number of software investments was down 17% from the second quarter.
“Technology is where all the growth is,” and it crosses sectors, Mr. Pakman said.
“There are more people in the world adopting technology than 15 years ago,” he said. The cost is down and the number of people using technology is up by multiple orders of magnitude, he addded.
“There is no industry that is safe from disruption” by the development of new technology, Mr. Pakman said.