Software Sector Leads First Quarter Venture Funding to Thirteen Year High; Biotech Sector Finishes Second (Again)

by McDonnell Boehnen Hulbert & Berghoff LLP
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NVCAEarlier this month, the National Venture Capital Association (NVCA), a trade association representing the U.S. venture capital industry, released the results of its MoneyTree Report on venture funding for the first quarter of 2014.  The report, which is prepared by the NVCA and PriceWaterhouseCoopers LLP using data from Thomson Reuters, indicates that venture capitalists invested $9.469 billion in 951 deals in the first quarter, which constituted a 12% increase in dollars and a 14% decrease in deals as compared with the fourth quarter of 2013, when $8.441 billion was invested in 1,112 deals (see chart below, which shows total venture funding from the first quarter of 2011 through the first quarter of 2014; data from MoneyTree Reports; click on chart to expand).  The nearly $9.5 billion invested in the first quarter was the highest quarterly total since the second quarter of 2001. 

Funding Total


PricewaterhouseCoopers (PWC)Venture funding in the biotechnology sector dropped from $1.375 billion in the fourth quarter of 2013 to $1.062 billion in the first quarter of 2014 (see chart below, which shows venture funding for the biotech (blue), medical devices (red), and software (green) sectors since the first quarter of 2011; data from MoneyTree Reports; click on chart to expand).  In addition to suffering a 23% drop in dollars, the biotech sector also dropped 21% in deals in the first quarter of 2014.  However, funding in the biotech sector was up from the first quarter of 2013, when $871 million was invested.

Funding By Industry


While the biotech sector secured enough funding to place second among the seventeen sectors tracked by the NVCA, the biotech sector received only 25% of the $4.008 billion in funding that was poured into the software sector in the first quarter -- the first time since the fourth quarter of 2000 that the software sector broke the $4 billion mark.  The software sector has now captured the top spot for eighteen straight quarters, with the biotech sector finishing second in all but two of those quarters (the industrial/energy sector knocked the biotech sector to third in the second quarter of 2010 and first quarter of 2011), and the software sector has received more than $2 billion in funding for eight consecutive quarters.

Medical device and equipment investment increased by 28% with respect to dollars and dropped by 37% in deals in the first quarter, with $588 million being invested in 61 deals.  Overall, nine of the seventeen sectors tracked by the NVCA saw decreases in dollars invested in the first quarter.

For additional information regarding this and other related topics, please see:

• "Biotech Venture Funding Rebounded in 2013 After Strong Fourth Quarter," January 26, 2014
• "Biotech Venture Funding Sees Second Quarter Rebound," July 22, 2013
• "Biotech Venture Funding Down 33% in First Quarter," April 30, 2013
• "Annual Venture Funding Drops for First Time in Three Years," February 4, 2013
• "Biotech Venture Funding Up 64% in Third Quarter," October 29, 2012
• "Venture Funding in Life Sciences Sector Drops 9% in Second Quarter," July 22, 2012
• "Biotech Venture Funding Drops 43% in First Quarter," May 3, 2012
• "Venture Funding Increased 22% in 2011," February 2, 2012
• "Life Sciences Venture Funding Drops in Third Quarter," October 27, 2011
• "Life Sciences Venture Funding up 37% in Second Quarter," August 1, 2011
• "VentureSource Reports 35% Increase in 1Q Venture Funding," April 26, 2011
• "NVCA Reports Modest Gains in First Quarter Venture Funding," April 19, 2011?
• "NVCA Reports 31% Drop in Venture Funding for Third Quarter," October 17, 2010?
• "NVCA Reports 34% Increase in Venture Funding for Second Quarter," July 22, 2010?
• "NVCA Report Shows First Quarter Drop in Venture Funding," April 20, 2010?
• "Biotech/Pharma Financing Improving, R&D Spending Up," August 31, 2009
• "NVCA Study Shows Increase in Third Quarter Venture Funding," October 23, 2009?
• "First Quarter Venture Capital Funding at 12-Year Low," April 23, 2009?
• "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009," February 16, 2009

 

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