Venture Capital Funding For Startups Soar To Its Highest Since 2001.
Funding for startup companies within the US have risen up to 57 percent during the first quarter to a level not seen since 2001, as venture capitalist threw more money into a growing number of deals, according to a report.
Startup investments have totaled over $9.47 billion in the first three months of the year, up from $6.01 billion within the first quarter of 2013. This was the highest point since the second quarter during 2001, when investments had reached over $11.5 billion. There were over 951 deals completed during the quarter, up from 916 in same period a year ago.
Software companies were the ones to receive the most amount of money, totaling $4 billion. Biotech came in a distant second with $1.06 billion. The last time the software sector managed to gain this amount of money was during the forth quarter of the year 2000, right as the dot-com bubble was about to burst.
The sharp increase in venture funding during the first three months of this year comes during a cooling of investors sentiment toward publicly traded technology stocks. Since March, shares of companies such as Twitter, Facebook, and Netflix has declined.
With some technology stocks doing down as much as 40 percent, for Twitter’s case, the sharp decline has begun to stir up questions about whether this downturn is only temporary or a sign of another possible bubble about to pop.
With that out of the way, one reason for these high amount of funding activity may be that VC are investing in maturing companies. Later-stage deals are much bigger than early-stage investment because of they help startups expand their business rather then off the ground.
Online storage startup Dropbox snatched the quarter top deal with over $325 million. It was the San Francisco company’s grouth round of financing. Vacation rental site Airbnb and mobile services TangoMe both tired for the number 2 spot, with $200 million each. This was Airbnb seventh round of financing, while this was TangoMe’s fourth round.
The MoneyTree Study was conducted by PricewaterhouseCoopers and the National Venture Capital Associateion, based on data gather by Thomson Reuters.