According to Preqin’s Venture Deals Analyst, Q3 2014 saw 1,706 venture capital deals globally at an aggregate value of $19.3bn, with the largest deal being a $1bn investment in the India-based e-commerce company Flipkart, which saw a wealth of investors participate, including Accel Partners, DST Global, Morgan Stanley and Tiger Global Management.
A decrease of 8% in number of deals and a decrease of 15% in aggregate value was evident in Q3 2014 when compared to the previous quarter – this represents the largest quarterly decrease in number of deals since Q3 2012 and the largest decrease in aggregate value since Q4 2011, as well as being the fifth largest decrease in value since 2007.
The US had by far the highest number of financings in Q3 2014 with 1,018, representing 60% of all Q3 deals and 763% higher than the second most active location, China, which saw 118 financings, representing 7% of the total. India was the only other location to have over 100 deals, with 112. What is interesting to note, however, is that Q3 2014 is the first quarter in the period 2007-present in which the UK has not appeared in the top three locations for investment. In Q3 2014 the UK placed fourth with 88 deals – a sharp decrease on the 132 deals seen in both Q1 and Q2 of this year. When comparing these rankings by aggregate value, a similar trend emerges. The top three countries: US, China and India, saw deals worth an aggregate $10.6bn, $3.1bn and $1.8bn respectively; combined these represent 80% of the total investment in Q3 2014. The UK, again in fourth place, received 4% of the total venture capital deal value ($750mn).
Angel/seed funding saw the greatest amount of deal activity in Q3, with 422 deals at an aggregate value of $356mn, followed by Series A with 322 deals at an aggregate value of $2.1bn. Therefore, as the graph above shows, early stage deals accounted for 44% of all equity financings in Q3 2014 – a slight decrease on the previous quarter. The largest aggregate deal sizes come from the later stages: Series B, $3.1bn & Series C, $2.4bn, while the Series F and Series G rounds hold the largest average deal sizes in Q3: $88mn and $134mn respectively.
In addition to deals, Q3 2014 exits also experienced a slower quarter than the previous quarter, a 13% drop, with 272 exits at an aggregate value of $41.3bn. The most prevalent exit type was trade sales (191) with an aggregate exit value of $13.4bn, however, despite such a vast difference in number compared to trade sales, the 32 IPO exits in Q3 2014 recorded the highest aggregate value of any exit type with $27.1bn – 66% of the total value share. The largest exit in the quarter was September’s IPO of Alibaba, in which the company and its investors raised $25bn by selling 368.1 million shares at $68 per share.