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2013 VC Year in Review – Yeah, it’s Strong.

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We were happy to see research firm CB Insights publish its annual Venture Capital Financing and Exit Annual Report last week. This shouldn’t come as a surprise to anyone, but VC funding is very, very healthy and showing no signs of slowing down, certainly not with the recent successful IPO’s by Twitter (TWTR), Care.com (CRCM), and zulily (ZU), the strong potential IPO pipeline for 2014 (e.g. Alibaba, Box, Dropbox, Lending Club, Opower, TubeMogul, Zoosk), nor recent acquisitions Nest/Google and AirWatch/VMWare.  With each successful exit (IPO’s or M&A), VC’s show bigger returns to LP’s, are then able to raise more and larger funds, thereby seeking more investment opportunities in private companies, ultimately driving valuations up.  Can’t wait to see what 2014 has in store!

While we don’t have access to the entire report, CB Insights saw 2013 venture capital financing reach $29.2Bn and 3,354 deals, marking the fifth straight year of record VC deal activity, driven largely by early-stage seed funding.  Deal volume grew 3% and 9% compared to 2012 and 2011, while funding dollars increased 3% from 2012 but down 5% against 2011 ($30.8 billion). Some other highlights:

  • October was the biggest month for funding with MongoDB’s $150MM and Pinterest’s $225MM rounds.
  • VC-backed IPO’s jumped 55% from 2012, led by 38 VC-backed healthcare companies going public, though M&A volume dropped 5%.  Healthcare IPO’s grew 217% but tech IPO’s dropped 7% in terms of deals from last year.
  • Due to growing micro VC’s and mega funds building seed portfolios, seed deals continued to rise, hitting a four-year high in 2013 and making up 26% of overall venture capital deal volume in 2013. Seed VC dollars deployed also hit a four-year high, rising 22% and 74% versus 2012 and 2011.
  • Mobile VC funding crossed the $1Bn mark for the first time in Q3 and continued through Q4.
  • NYC is establishing itself as the clear #2 behind CA, hitting a five-year high of $2.9Bn (up 49%), while the 396 deals represent a 12% increase from 2012.  Almost two thirds of the deals were seed or Series A stage rounds.  MongoDB ($150MM), Fab.com ($150MM), and Quirky ($79MM) led the way in amounts raised.
  • Andreessen Horowitz was the most active VC in 2013, jumping from 3rd place in 2012. Google Ventures also grew to 3rd in 2013 from 5th. 500 Startups moved to 2nd place.

More highlights from the CB Insights report can be found here, but you’ll need a subscription for the full report.

Christopher Chiou

Bay Area based for 12 years and originally from the NYC area. My career has been spent as a technology dealmaker, advising clients on M&A and capital raising, and as a principal investor backing great companies and teams. I'm passionate about technology trends, traveling, sports, politics, Knowledge, and Duke basketball.

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