VC Funding for Software Jumps in MoneyTree Report, and Top 10 Deals

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the sector that received the most capital during the quarter was Information Technologies (28 percent, or nearly $2.3 billion). In the MoneyTree Report there is no Information Technology category per se; those deals are instead counted under software or IT services.

Nevertheless, the overall trends are roughly comparable, and each survey is showing a slight upward trend in overall venture activity.

“I think deals are picking up because of the opening of the IPO window,” said Jay Lichter, a partner at San Diego’s Avalon Ventures who specializes in the life sciences. “This really changes the dynamic of fundraising and more importantly exits [for venture-backed startups].”

According to the MoneyTree Report, the software industry grabbed the most funding during the quarter, at $3.6 billion, and nine of the 11 biggest rounds involved software deals. It was the first time in twelve years that venture funding for software startups exceeded $3 billion in a single quarter. Software also accounted for the most deals—420—up 23 percent from the 342 deals counted in the second quarter of 2013.

“Software is a natural increased area of focus given that many tech deals are less capital intensive to get to proof of concept,” said John Taylor, the NVCA’s head of research, in a statement today. Taylor said he also was encouraged by the fact that seed and early stage deals accounted for more than half of the investment activity.

“We are balancing this optimism, however, against the recognition that VCs are still trying to gain exits for … Next Page »

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