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Technology > Investment Platforms

Venture Capital Dealmaking Strong in First Quarter

By Michael S. Fischer

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The amount of capital invested in fledgling companies by the venture capital sector in the first quarter rose to $27 billion globally, up from $18 billion in the 2014 opening quarter.

A report by Preqin, the alternatives data provider, said that first-quarter investments in new companies surpassed those of the fourth quarter, the highest on record.

Although the number of companies receiving venture capital investment globally fell by 6% from the previous quarter, the average size of deals has been growing significantly in recent years, according to Preqin.

In the January-to-March period, the aggregate value of deals increased by 4% over Q4 2014.

North American deal flow fell by 8%, while the value of deals rose by 7%. European deal volume also contracted slightly from the previous quarter, but the aggregate value of deals jumped 41%.

Angel/seed financing rounds so far in 2015 have averaged $1.5 million, 25% higher than the 2014 average and the highest average value since 2007, according to Preqin.

The average value of Series D stage and later deals increased from $73 million in 2014 to $100 million in the first quarter.

The U.S. companies SpaceX, an aerospace startup, and Uber Technologies, a telecoms outfit, each received $1 billion in the first quarter, the former in an unspecified financing round and the latter in a Series E round.

The following entrepreneurial companies rounded out the 10 biggest deals in the first quarter:

  • Aduro BioTech (U.S.)—pharmaceuticals, Series E, $750 million
  • Meituan.com (China)—Internet, Series D, $700 million
  • Meizu Telecom Equipment Co. (China)—telecoms, unspecified round, $650 million
  • Kuaidi Dache (China)—telecoms, Series D, $600 million
  • One97 Communications (India)—Internet, unspecified round, $575 million
  • Delivery Hero (Germany)—Internet, unspecified round, $568 million
  • Lyft (U.S.)—Internet, Series E, $530 million
  • Shanghai Lujiazui Int’l Financial Asset Exchange (China)—financial services, unspecified round, $483 million

Preqin reported that the trade sale of Auspex Pharmaceuticals to Teva Pharmaceuticals for $3.2 billion was largest exit from venture capital investments during the first quarter.

The report calculated that venture capital currently available for investments was $132 billion, up $11 billion from the start of the year.

“Managers have significant amounts of capital to deploy, and with many innovative companies vying for investment worldwide, deal activity is likely to remain strong in 2015,” Christopher Elvin, Preqin’s head of private equity products, said in a statement.

“Yet with the average size of deals growing significantly, there might be slight concerns that valuations for potential investment are becoming inflated.”

— Check out Is Investing in Movies a Good Investment Strategy? on ThinkAdvisor.

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