Second Quarter VC Deals Up, Money Raised Down

DETROIT — Venture capital firms invested $46.2 million in 18 Michigan deals in the second quarter, according to the quarterly MoneyTree Report, released by the National Venture Capital Association and the accounting firm PricewaterhouseCoopers, based on data from the media firm Thomson Reuters.

That’s down in terms of money from the first quarter, when $87.3 million was invested, but up in terms of deals, when there were 12.

The same trend is in evidence from a year earlier. In the second quarter of 2014, VC firms invested $114.9 million in 11 deals.

Leading the second quarter 2015 Michigan deals was $10.5 million raised by NeuMoDx Molecular Inc., an Ann Arbor developer of advanced nucleic acid testing, $4.6 million raised by the Grand Rapids IT management software developer BlueMedora LLC, and $3 million for Kalamazoo-based Lynx Network Group Inc., which owns a 2,000-mile high speed fiber optic network that provides data services in rural areas of Michigan.

Nationally, the MoneyTree report found that venture capitalists invested $17.52 billion in 1,189 deals in the second quarter. The quarterly investment figure was up 30 percent in terms of dollars and 13 percent in the number of deals from the first quarter, when $13.5 billion was invested in 1,048 deals.

The report said the second quarter is the sixth consecutive quarter of more than $10 billion of venture capital invested in a single quarter.

Nationally, there was $7.3 billion invested in software companies, up 30 percent from the first quarter, including 26 “megadeals,” defined as deals of $100 million or greater. There were 491 deals, up 11 percent from the first quarter and the highest quarterly deal count since the third quarter of 2000.

The media and entertainment industry was the second largest industry for dollars invested, with$2.7 billion going into 118 deals, an increase of 127 percent in dollars and a 34 percent rise in total number of deals.

The biotechnology industry captured the third largest total for dollars invested in the second quarter but was second in terms of number of deals with $2.3 billion going into 126 deals, a 32 percent increase in dollars invested but flat in number of deals compared to the prior quarter. It’s the largest quarterly investment total going into biotechnology companies since the inception of the MoneyTree Report in 1995.

Other sectors seeing an increase in dollars invested were consumer products and services, medical devices and equipment, internet companies and financial services. Seed stage investment was up 85 percent in dollars and 81 percent in deals with $169 million invested into 47 deals in the second quarter. Early stage investment was up 58 percent in dollars and 16 percent in deals with $5.8 billion going into 593 deals. Seed and early stage deals accounted for 54 percent of total deal volume in the quarter, up from 51 percent in the prior quarter. The average seed stage deal in the second quarter was $3.6 million, up from $3.5 million in the first quarter of 2015. The average early stage deal was $9.8 million, up from $7.2 million in the prior quarter. Expansion stage investment was up 38 percent in dollars and 12 percent in the number of deals, with $7.3 billion going into 328 deals. Overall, expansion stage deals accounted for 28
percent of venture deals in Q2. The average expansion stage deal was $22.5 million, up from $18.2 million. Investments in later stage companies fell 5 percent to $4.2 billion going into 221 deals in the second quarter. Later stage deals accounted for 19 percent of total deal volume, down slightly from the prior quarter. The average later stage deal in the second quarter was $18.8 million, down from $20.2 million in the prior quarter.

MoneyTree Report results are available online at www.pwcmoneytree.com and www.nvca.org. Data is primarily obtained from a quarterly survey of venture capital practitioners conducted by Thomson Reuters. Information is augmented by other research techniques including other public and private sources. All data is subject to verification with the venture capital firms and the investee companies.

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