Cristine Carlton January 17, 2014
PitchBook recently published its 2014 Annual U.S. VC Valuations & Trends Report, which offers data-driven analysis of venture capital activity in 2013, including deal flow, valuation changes, exits and fundraising. In today’s PitchBook TV video, Adley Bowden, senior director of Analysis, highlights a few of the top VC trends of 2013 included in the report, as well as some trends to keep an eye on in 2014. Here’s a look at what he had to say:
Valuations hit decade high
Roughly $34 billion was invested across 4,000 venture rounds in the United States in 2013. This is right in line with the last few years and shows that deal-making in the VC industry has remained strong. This high level of activity has spurred on some discussion about whether or not we’re in a bubble—particularly in the tech industry. Valuations across all series types hit a decade-high last year, but the later stages saw particularly large jumps, with the Series C median pre-money valuation climbing to $62 million and the valuation for Series D and above hitting $105 million.
84 VC-backed IPOs in 2013
A total of 84 VC-backed companies went public last year. This was the most since the early 2000’s internet bubble burst. While Twitter and other tech companies stole most of the headlines, it was really a very diverse group that went public in 2013. For instance, 34 of the companies that had an IPO were healthcare and biotech companies.
Valuations have room to grow
As we look forward to 2014, what are we keeping our eye on? First and foremost is valuations. Are they going to continue to rise? How much so? We do think there’s still plenty of room to grow. Only about three out of five financings in 2013 were up rounds, which is high but actually below what we saw pre-crisis, when 75% of rounds were up rounds. We do think there’s probably a natural limit on valuations, at least in the near term, so we’re going to be watching as valuations increase and how that will affect the dynamics of the market.
Positive 2012 and 2013
We will also be watching the exit front continue to grow, specifically capital getting returned back to limited partners. Both 2012 and 2013 were positive years for exits, but whether or not LPs take that capital and reinvest it back into VC funds to help spur on the next round of startups will be an interesting story to watch in 2014 and beyond.
Which sectors are we watching for VC investment?
Big data and mobile payments will continue to grab our attention in 2014. There is definitely still some late stage investing going on in these industries—and even in the early stage, as well—but some larger VC-backed companies are nearing the exit. We’ll be keeping an eye on big data and mobile payments companies over the course of 2014. We think 3D printing will also be a very interesting area in 2014, as the technology becomes more readily available and more affordable to a larger set of potential businesses and consumers.
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