Venture Capital Deal Activity in California – January 2015

by Philipp Kuny

  • 29 Jan 2015
  • PE
  • VC

The US witnessed 4,456 venture capital-backed deals in 2014, 44% of which were investments in California-based portfolio companies, accounting for $30.1bn (58%) of aggregate deal value in the US last year. The number of venture capital deals in California demonstrates the importance of the region to the industry. The next most prominent states, New York and Massachusetts, recorded 514 and 347 venture capital deals in the year respectively.

Q2 2014 saw a record-breaking aggregate deal value of $8.9bn invested in California, the highest quarterly aggregate value since 2007. The high value of California-based deals in Q2 2014 was primarily due to the $1.2bn financing of Uber Technologies. Preqin’s Venture Deals Analyst online service recorded 475 venture capital-backed deals in California in Q2 2014, being approximately in line with the average of 481 deals per quarter in the last three years. 

When analyzing California’s deals by stage, angel/seed investments accounted for the highest proportion of venture capital deals in the state, representing 29% and 24% of the total number in 2013 and 2014 respectively. In comparison with 2013, there were 107 fewer angel/seed investments in 2014, while Series A investments remained stable; 322 deals took place in 2014. Series B and later stage investments increased by 34 deals to 448 venture capital financings taking place in 2014. 

Investments in the information technology sector continue to dominate California’s venture capital landscape, accounting for 58% of the total number of deals in 2014. The internet sector alone accounted for 212 early stage investments in 2014, nourishing the appetite for possible large exits in the near future. With 310 venture capital deals in 2014, the telecoms sector witnessed a record-breaking year. In contrast, the healthcare sector witnessed a small drawback, with 266 venture capital deals completed in California in 2014, down slightly from 278 deals in 2013 and 303 deals in 2012.

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