VC funding has hit levels last seen during the dot-com boom. Q1:14 activity in VC funding totaled $9.992 billion across 880 deals, a jump of 44% in funding and a 5% rise in deal activity from the same quarter last year. Valuations also soared during the record quarter as new $1B+ valuation financing rounds in the three month period were equivalent to the total number of U.S. tech companies that raised their first financing at a $1B+ valuation in all of 2013.
On the exit front, the 35 US-based VC-backed IPOs in Q1:14 marked the highest quarterly tally for VC-backed offerings since Q3 2000. VC-backed M&A also jumped in Q1:14 – the 174 venture-backed mergers or acquisitions in Q1 represented 69% growth from the same quarter last year. Of the 35 VC-backed IPOs in Q1:14, 22 came from the healthcare sector, after seeing just 4 in Q1:13. The 13 VC-backed tech IPOs in Q1 marked the highest tally since Q1:12 – and a 333% jump compared to same quarter last year.
Since 2009, corporate participation in the 100 largest VC deals by year has increased substantially. And corporations are definitely getting active as the top 30 public tech companies by market cap, have $180 billion of cash on their balance sheets.
Hedge funds and mutual funds have collectively invested in 44% of the current crop of private, venture-backed companies that have raised financing at a $1B+ valuation. And corporations and corporate venture arms increased their participation – having invested in a notable 71% of the billion-dollar club. While corporations are the most prominent among the billion-dollar club and VCs who got in early stand to reap the biggest gains from the potential unicorn exits, it seems the addition of a hedge fund, mutual fund or cash-rich corporate investor has become a precondition to achieve a $1B+ valuation.