Venture capital funding soars to nearly $33 billion in 2014
U.S. venture capital fundraising soared last year, spiking 62% to nearly $33 billion across 332 funds and highlighting a strong market for early-stage companies.
2014 also saw the highest number of U.S. VC-backed initial public offerings since 2000, when 210 IPOs were completed. During 2014, 105 companies garnered a total of $9.2 billion, according to a report to be released Thursday by Dow Jones VentureSource.
Jeff Grabow, U.S. venture capital leader for Ernst & Young, said raising VC funding is currently “easier than at any time that I’ve seen in my career.”
“Access to capital is available; we’re in a good market for innovation across a lot of different sectors,” he said. “It’s a healthy fundraising environment, so people are saying, ‘Take advantage of that, make sure you have capital because it’s not always going to be there.’”
In the Los Angeles metro region, the number of equity funding rounds came in essentially flat at 146, only one more than in 2013. But the total amount invested jumped sharply, up 44% to $2.3 billion.
“There’s a lot of activity going on up and down the ecosystem in the Santa Monica area,” Grabow said. “And it’s good when you have funding like that happen. It’s a market signal: If you’re able to raise that kind of money in an area that may not have raised that much in the past, that’s always good.”
Nationally, IPO activity remained strong in the fourth quarter.
Twenty-one venture-backed companies raised $3 billion through public offerings in the fourth quarter. While the number of listings fell 5%, capital raised more than doubled the amount from the previous quarter.
The largest IPO of the fourth quarter was LendingClub Corp., which completed an $870-million IPO.
Grabow noted that the funding landscape has “changed dramatically” in recent years. The cost of starting a company is lower than in the past, and many entrepreneurs raise money from friends and family as well as funding platforms such as Kickstarter and Indiegogo.
That means when VCs enter the picture, they’re often coming in at the later stages and putting in more money to accelerate the growth of a more established company.
In the last quarter, the top three equity deals for venture-backed companies in the U.S. included one from L.A.: Venice-based Snapchat, which raised $485.6 million. No. 1 was Uber in San Francisco, which raised a whopping $1.2 billion. No. 2 was Magic Leap, a Florida developer of an augmented reality visual computing system.
Twitter: @byandreachang
