By Donald Zuhn --
Last week, the National Venture Capital Association (NVCA), a trade association representing the U.S. venture capital industry, released the results of its MoneyTree Report on venture funding for the third quarter of 2014. The report, which is prepared by the NVCA and PricewaterhouseCoopers LLP using data from Thomson Reuters, indicates that venture capitalists invested $9.9 billion in 1,023 deals in the third quarter, which constituted a 27% decrease in dollars and a 9% decrease in deals as compared with the second quarter of 2014, when nearly $13.5 billion was invested in 1,129 deals (see chart below, which shows total venture funding from the first quarter of 2011 through the third quarter of 2014; data from MoneyTree Reports; click on chart to expand). Despite the third quarter decline, total venture funding for 2014 ($33.0 billion) has already eclipsed total funding for all of 2013 ($30.0 billion).
Mirroring the drop in total funding, venture funding in the biotechnology sector dropped from $1.84 billion in the second quarter of 2014 to $1.1 billion in the third quarter of 2014 (see chart below, which shows venture funding for the biotech (blue), medical devices (red), and software (green) sectors since the first quarter of 2011; data from MoneyTree Reports; click on chart to expand). In addition to experiencing a 43% decrease in dollars, the biotech sector also saw a 10% decrease in deals, with 110 deals in the third quarter of 2014. Funding in the biotech sector, however, was up from the third quarter of 2013, when $984 million was invested.
The software sector once again captured the top spot among the seventeen sectors tracked by the NVCA, collecting $3.7 billion (down 39% from the $6.1 billion the industry picked up in the second quarter). The software sector has now captured the top spot for twenty straight quarters, with the biotech sector finishing second in all but three of those quarters (the industrial/energy sector knocked the biotech sector to third in the second quarter of 2010 and first quarter of 2011, and the media and entertainment sector knocked the biotech sector to third in the latest results). The software sector has also received more than $2 billion in funding for ten consecutive quarters.
Medical device and equipment investment decreased by 13% with respect to dollars in the third quarter, with $586 million being invested in 78 deals (the same number of deals as in the second quarter). As for the three sectors above, ten of the seventeen sectors tracked by the NVCA saw decreases in dollars invested in the third quarter.
For additional information regarding this and other related topics, please see:
• "Software Sector Leads Pack in 2Q Venture Funding and Biotech Sector Finishes Second," July 20, 2014
• "Software Sector Leads First Quarter Venture Funding to Thirteen Year High; Biotech Sector Finishes Second (Again)," April 30, 2014
• "Biotech Venture Funding Rebounded in 2013 After Strong Fourth Quarter," January 26, 2014
• "Biotech Venture Funding Sees Second Quarter Rebound," July 22, 2013
• "Biotech Venture Funding Down 33% in First Quarter," April 30, 2013
• "Annual Venture Funding Drops for First Time in Three Years," February 4, 2013
• "Biotech Venture Funding Up 64% in Third Quarter," October 29, 2012
• "Venture Funding in Life Sciences Sector Drops 9% in Second Quarter," July 22, 2012
• "Biotech Venture Funding Drops 43% in First Quarter," May 3, 2012
• "Venture Funding Increased 22% in 2011," February 2, 2012
• "Life Sciences Venture Funding Drops in Third Quarter," October 27, 2011
• "Life Sciences Venture Funding up 37% in Second Quarter," August 1, 2011
• "VentureSource Reports 35% Increase in 1Q Venture Funding," April 26, 2011
• "NVCA Reports Modest Gains in First Quarter Venture Funding," April 19, 2011
• "NVCA Reports 31% Drop in Venture Funding for Third Quarter," October 17, 2010
• "NVCA Reports 34% Increase in Venture Funding for Second Quarter," July 22, 2010
• "NVCA Report Shows First Quarter Drop in Venture Funding," April 20, 2010
• "Biotech/Pharma Financing Improving, R&D Spending Up," August 31, 2009
• "NVCA Study Shows Increase in Third Quarter Venture Funding," October 23, 2009
• "First Quarter Venture Capital Funding at 12-Year Low," April 23, 2009
• "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009," February 16, 2009