In Q4, VCs Kept Funding Young Companies But Slowed Later Bets

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Call it the Fidelity effect.

According to a new MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association, there appears to have been a chill in late-stage funding in the fourth quarter of last year, while investors continued stuffing money into seed- and early-stage investments.

According to PWC and NVCA data, investors poured $375 million in 52 seed deals in the fourth quarter, and the average seed deal rose from $4.1 million in the third quarter to $7.2 million in the fourth (which is a lot of money for a seed-stage company!).

Early-stage deals also rose slightly, garnering an average of $10 million per deal, up from $9 million in the third quarter.

For all of 2015, the average amount invested for both seed and early stage deals was up 23 percent over 2014.

Expansion-stage investments — likely impacted by the very public markdowns made by investors like Fidelity — were meanwhile down 53 percent in dollars and 10 percent in number of deals from the previous quarter, with $3 billion going into 247 deals.

Similarly, investment in late-stage companies dropped 33 percent in dollars from the third quarter, with $3 billion going into 169 deals in the fourth quarter.

Altogether, in the fourth quarter, U.S. VCs poured $11.2 billion into 962 deals, marking the eighth consecutive quarter that VCs have invested more than $10 billion in startups in a single quarter.

That’s a lot of capital, though the numbers are down 32 percent in terms of dollars and 16 percent in number of deals compared with the third quarter, when $16.6 billion was invested in 1, 149 deals. (Note: Fourth quarter numbers are usually down from third quarter numbers, as people start shutting things down for the holidays, etc.)

Altogether, says the new report, U.S. VCs plugged $58.8 billion into startups last year.

Software companies attracted the most funding in the fourth quarter, garnering $4.5 billion across 369 deals. For all of 2015, says PWC and the NVCA, software nabbed 8 percent of venture dollars.

Life Sciences companies (meaning biotech and medical device startups combined) received the second largest amount of for the quarter, with $2 billion going into 172 deals. For all of 2015, life sciences companies attracted 12 percent of all venture dollars.

In third place for the fourth quarter: media and entertainment companies, which garnered $881 million across 114 deals. For all of  2015, media and entertainment startups garnered 13 percent of all capital invested.

You can check out many more stats from the new report right here.

Featured Image: Paul Inkles/Flickr UNDER A CC BY 2.0 LICENSE