U.S. Tech Companies Raised $8.1B In 806 VC Deals In Q3, Capital Raised, M&A Activity And IPOs All Up From Previous Quarter

Dow Jones Venture Source released its quarterly report on the state of venture capital, including data on number of VC deals, funds raised, M&As and IPOs in the technology sector. According to the report U.S.-based companies raised $8.1 billion from 806 venture capital deals in 3Q 2013, a 2% increase in capital and a 4% decrease in number of deals from the previous quarter.

Compared to the same period in 2012, there was a 10% decrease in number of deals, while amount raised went up by 4%. The sectors to increase in amount raised were Business and Financial Services (46%) and Consumer Services (1%). We had reported earlier that seed and angel investments are up for the quarter as well. By industry group, IT led the pack with 246 deals raising $2.3 billion and accounting for 28% of total equity investment. Business and Financial Services saw $2.2 billion through 195 deals. Healthcare placed third with $1.8 billion in 164 deals. And $1.3 billion were raised by Consumer Services in 148 deals, a decrease of 10% in deal flow, while capital invested went up by 1%.

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The largest deals in the quarter included Beat’s $500 million raise, Uber’s $258 million funding round, Palantir’s $200 million raise, and MongoDB’s $150 million round. The most active investors by amount of deals were in order, Google Ventures (25), Sequoia Capital (17), Andreessen Horowitz (17), Kleiner Perkins (16) and NEA (15).

M&A increased by 11% from 2Q 2013, with 111 deals garnering $9.7 billion. This is consistent with our CrunchBase data as well. The number of deals also increased by 25 percent from the previous quarter. These included IBM’s $1 billion acquisition of Trusteer, and AOL’s $405 million purchase of Adap.TV.

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IPOs seem to be seeing an uptick, with 25 companies raising $2.2 billion through public offerings in 3Q 2013. Both number of deals and capital raised increased from the previous quarter, with 25% and 24% increases, respectively. The largest IPOs of the quarter were FireEye and Violin Memory.

Median pre-money valuations decreased slightly by 7% from 2Q 2013. In terms of VCs themselves, firms raised 11% more funds than the previous quarter and saw the highest number of funds since 4Q’08. The data shows that 62 funds raised $4.1 billion in 3Q 2013, an 11% increase in number of funds, but a 47% decrease in the amount raised from the prior quarter. Greylock raised the largest fund in the quarter at $1 billion, accounting for 25% of the total amount raised in 3Q 2013. The median U.S. fund size was $123 million in the three quarters of 2013.

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