January 14, 2016
Last year saw a steady, continuous growth in venture dollars and tech companies continue to lead the pack. Although overall exits and deals are down, venture dollars are on the rise.
Funds Closed and Capital Raised
Even with venture funds growing steadily, there are a few highlights from 2015 that really stands out based on Pitchbook’s analysis. For starters, the median fund size has increased by 71 percent, moving from $35 million in 2014 to $60 million in 2015; however, the number of overall closed funds is slightly down.
Last year venture capitalists closed more than $51.1 billion in funds across 345 deals, and in 2014 they closed $47.9 billion across 389 deals. When comparing year-over-year quarterly deals closed there was not a significant change except for in the third quarter, which saw a decline from 107 to 80 deals.
According to Pitchbook the average fund took a little over a year to close, or approximately 14.1 months. The largest came from New Enterprise Associates $2.8 billion, followed by Tiger Global Private Investment Partners with $2.5 billion, and DST Global with $1.7 billion.
Exits Down Across the Board
Venture capital exits, their related capital, and the median exit size have all gone down from 2014 to 2015. Across each quarter there was a steady decline. Venture exits were down 17.3 percent with just 1,415 vs 1,683. This resulted in a decrease of exited venture dollars from $116.7 billion to $85.3 billion and the median size down 13.8 percent overall.
Interestingly it was a big year for heath care IPOs, as they took up 58 percent of IPOs vs other industries. Overall, software or tech companies still had the highest volume of exits. Acquisitions are still the weapon of choice, making up 77.6 percent of exits last year. Accordingly, the median time to exit by acquisition is now 7 years, 9.5 years to IPO, and 10.6 years for a buyout.
Global Dollars and Valuations
As to be expected, the global market also saw similar trends to that found in the US; deals are down but dollars are up. Similarly, software and tech companies continue to take on the largest number of deals when compared to other industries.
On a positive note, based on PitchBook’s analysis of more than 6,600 venture company valuations, the median pre-money valuation for all stages of companies are on the rise. Overall pre-money valuations are up 37.5 percent, from $13.8 million to $19.7 million.
In 2015, the median seed stage startup increased by nearly a million in pre-money valuation, with the average deal size at $1 million. The most drastic improvements went to Series C and Series D valuation. In 2014 the median Series C valuation moved from $63 million to $85 million, and Series D level companies saw an increase from $149.3 million to $212.5 million.
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