The ugly afterlife of crowdfunding projects that never ship and never end

The ugly afterlife of crowdfunding projects that never ship and never end | Ars Technica.

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Enterprise Investments Surge To Over $5.4 Billion

The amount of capital invested in these startups has already surged to over $5.4 billion in the first half of 2014. That’s roughly the same amount that enterprise-facing companies raised in the entire year for 2013.

The surge in investment dollars is actually accompanied by a slowdown in commitments to new technology companies, indicating that investors’ confidence in the sector’s strength is matched by a belief that this current crop of business technology companies is maturing. In the second quarter of 2013, investors backed 328 startups in the enterprise software category, by the second quarter of 2014 that number had declined to 205.

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While the numbers indicate a slowdown in the commitments going to business-focused technologies, some investors insist this is only the beginning. The idea of selling software as a hosted online service has been around for nearly a decade, beginning with the Salesforce.com customer relationship management revolution, but the technologies that are moving to the cloud were never part of core business operations, they argue. Now, these hosted software businesses are everywhere, and taking over core functions that used to be the purview of internal information technology departments.

Tech Bubble- Do Trends Point to a Bubble?

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.q1report1-1
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. q1report2 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. corporate-vc-jumping-in-3

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.billiondollarinvestors 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.

VC Financing and Exit Activity Hits Highest Levels Since 2000-2001

During Q1 2014 venture capital investment hit its highest quarterly mark since Q2 2001 driven by a host of notable mega-deals. The $9.99 billion invested across 880 deals in Q1 2014 rose 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 quarter were equivalent to the total number of U.S. tech companies that raised their first financing at a $1B+ valuation in all of 2013.

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On the exit front, the 35 U.S.-based VC-backed IPOs in Q1 2014 marked the highest quarterly tally for VC-backed offerings since Q3 2000. VC-backed M&A also jumped in Q1 – 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, 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 2012 – and a 333% jump compared to same quarter last year.

35 U.S.-based VC-backed companies went public in Q1, the highest quarterly tally since Q3 2000.  VC-backed M&A also jumped in Q1 – the 174 venture-backed mergers or acquisitions in Q1 represented 69% growth from the same quarter last year.

Among the largest VC-backed exits in Q1 were Facebook’s acquisitions of Sequoia Capital-backed WhatsApp and Andreessen Horowitz-backed Oculus VR as well as the acquisition of home automation firm Nest Labs by Google. Venrock-backed Castlight Health was the largest VC-backed IPO of the quarter.Image

Out Early: 67% of Tech M&A Exits in 2013 Went to Early-Stage Startups

2013 saw 67% of tech startups exit after either the seed or Series A stages. The chart below highlights the last round of funding raised prior to M&A or IPO exit of venture-backed tech companies last year; Just 3% of VC-backed tech exits went to startups at the Series D+ stage. lastfundinground1

Out Early: 67% of Tech M&A Exits in 2013 Went to Early-Stage Startups.

Top 15 Corporate Venture Capital Investors By Exit Activity

Since the start of 2009, Intel Capital has realized the highest number of M&A or IPO exits of any investor (corporate or pure-play VC), followed by Cisco Investments. SAP Ventures had the highest share of IPO exits at 33% including Criteo, Violin Memory and Control4, followed by VC Novartis Venture Funds at 30%. topcvcshare

TOP 15 CORPORATE VC INVESTORS BY SHARE OF M&A/IPO EXITS SINCE 2009

via The Top 15 Corporate Venture Capital Investors By Exit Activity – Who Saw the Highest Share of IPO Exits?.