VC Market Continues Growth in Third Quarter of 2013

Early data from a number of sources indicates that the venture capital market continued its resuscitation from the 2008 crisis during the third quarter of 2013. CB Insights reports that 857 venture deals representing $7.2 billion were completed last quarter, which, by their data, would be the highest rate of dealflow since the dotcom era. Other sources report a similar number of deals, but find that some quarters in recent years have been more active. Initial public offerings (IPOs), mergers and acquisitions (M&As) and valuations have all risen over the last few quarters, though venture fundraising is down for the year, according to data from the National Venture Capital Association (NVCA) and Thomson Reuters.

The CB Insights report notes that venture investment activity continues to slowly gain momentum. The $7.2 billion figure represents the third straight quarter of growth. PitchBook Data reports a similar number of deals and a total investment level of $7.3 billion, but cites higher numbers for other quarters in recent years. NVCA investment figures are not yet available.

The mobile sector had its best quarter yet, generating $1.12 billion in investment, according to CB Insights. Deals and dollars for the cleantech sector continue to fall, with 33 deals compared to 40 in the previous quarter and 47 during Q3 2012.

While VC fundraising in 2013 has fallen from 2012 levels, venture-backed exits appear to be strong, according to data from the NVCA and Thomson Reuters. The third quarter of 2013 marks the first time that more than 20 initial public offerings have been made in two consecutive quarters since 2004. A total of 26 venture-backed IPOs were made last quarter, raising $2.7 billion, while 23 deals raising $2.4 billion were made in Q2 2013. That level of activity is more than double the rate and value of IPOs in the same quarters of 2012. M&A activity was up the third quarter, with an increase of 45 percent of disclosed M&A values, however, total M&A activity remains well below 2011 and 2012 levels.

Venture fundraising improved in Q3, but totals for the year remain below 2012. Dollar commitments during the first three quarters are down 29 percent from the same period last year, according to the NVCA/Reuters data. The top five funds accounted for 58 percent of total dollars raised in Q3. Columbus, OH's, Drive Capital topped that list, raising $181 million over the summer. Overall this year, 144 new funds have been raised, 56 of them in the third quarter. While Q3 marked a notable uptick, new funds remain well below 2012.

Read the NVCA Reuters releases at: http://nvca.org.