mattermark q1 2015 quarter midpoint analysis - u.s. venture capital activity

U.S. Venture Capital Q1 2015 Mid-Quarter Trend Analysis

February 22, 2015

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© 2015 ALL RIGHTS RESERVED ● MATTERMARK TRACTION REPORT ● MATTERMARK.COM ● (415) 366-6587

This report provides a data-driven exploration of the United States startup funding environment over the past year. The resources that flow into startups each year are a calculated risk on the part of investors, founders, employees, service-providers and everyone who stands to benefit from the proliferation of new product, better services, and saved time and money.

Understanding how businesses are created, funded, grown and ultimately rewarded with sustainability or an exit helps inform the conversations and actions for the coming years, and it is our hope you will read this report and combine it with your special knowledge of your industry, region, role and community as you charge forward into the New Year.

Sincerely,

Danielle Morrill, CEO & Cofounder of Mattermark

Acknowledgements

This analysis would not be possible without a team effort. Thank you to the Mattermark analysts, researchers, software engineers and designers who made this report possible: Sarah Catanzaro, Bryan Chang, Clare Corthell, Avi Eisenberger, Nick Frost, Kevin Liu, Josh Luxton, Samiur Rahman, and Tristan Williams and many more.

MATTERMARK Q1 2015 MID-QUARTER ANALYSIS

2

Introduction

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© 2015 ALL RIGHTS RESERVED ● MATTERMARK TRACTION REPORT ● MATTERMARK.COM ● (415) 366-6587 3

Table of Contents

2 3 5 9

13 16 18 22


INTRODUCTION

METHODOLOGY

DEAL VOLUMES

CAPITAL DISTRIBUTION

CAPITAL CONCENTRATION

MEGA “PRIVATE IPO” ROUNDS

RISING VALUATIONS

ECOSYSTEM IMPACT: NEW YORK

Disclaimer

This information has been prepared by Mattermark Inc. solely for informational purposes. It is not, and should not be regarded as, investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only and are subject to change without notice.

This information is provided with the understanding that with respect to the material provided herein, you will make your own independent decision with respect to any course of action based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action.

Neither the information, nor any opinion contained herein, constitute a solicitation or offer by Mattermark, Inc. to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. Mattermark, Inc. does not purport to, and does not, in any fashion, provide broker/dealer, consulting or any related services. Mattermark, Inc. shall not have any liability for any damages of any kind whatsoever relating to this material. By accepting this material, you acknowledge, understand and accept the foregoing.


© 2015 ALL RIGHTS RESERVED ● MATTERMARK TRACTION REPORT ● MATTERMARK.COM ● (415) 366-6587

Time Period

For this report we compared Q1 2014 and the 2014 calendar year to Q1 2015 in progress. For all “pace” metrics, we have taken the current deal volumes or amounts invested between January 1st and February 15th and assumed the same pace for the remainder of the quarter.

Funding Rounds

For venture rounds, we only included deals in which the amount of funding raised was disclosed.

“Late” stage rounds include all rounds Series D and beyond (traditionally the 4th round of venture funding).

“New York” includes the New York metro region (for example Jet is based in New Jersey according to our data set, but was still included in the geographical analysis).

Data Sources

Mattermark uses a broad range of sources to present the most complete picture possible of the startup ecosystem. In addition to extensive primary source research sourced specifically for this report, Mattermark uses publicly-available data from Crunchbase (www.crunchbase.com), AngelList (www.angel.co), NASDAQ (www.nasdaq.com), the United States Securities and Exchange Commission (www.sec.gov), The White House Office of Management & Budget, and source relationships with thousands of investors, community leaders and startup founders.


4

Methodology


http://www.crunchbase.com

http://www.angel.co

http://www.nasdaq.com

http://www.sec.gov

DEAL VOLUME

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http://www.MATTERMARK.COM


Num

ber o

f Fun

ding

Eve

nts

0

20

40

60

80

100

120

Q1 2015

Seed Series A Series B Series C Late Other

32

78

37

5974

109

U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 2015366 COMPANIES FUNDED



Num

ber o

f Fun

ding

Eve

nts

0

50

100

150

200

250

300

350

400


Q1 2014 Q1 2015

3778

375974

108 124

6738

74102

359

U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 2015Q1 ’15 MIDPOINT VS. ’14 MIDPOINT


Q1 2014

Other16%

Late Stage9%

Series C5%

Series B10%

Series A13%

Seed47%

Q1 2015

Other9%

Late Stage20%

Series C9%

Series B15%

Series A19%

Seed27%


U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 2015DEAL VOLUME BY STAGE


CAPITAL INVESTED



U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 2015$9.7B DOLLARS INVESTED


Capi

tal In

veste

d (in

Billi

ons o

f Dol

lars U

SD)

$1

$2

$3

$3

$4

$5

$6

Investment Stage


$1.13

$5.18

$1.16$1.26$0.76$0.20



Dol

lars I

nves

ted

(in B

illion

s USD

)

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00


Q1 2014 Q1 2015

$1.17

$5.18

$1.16$1.26$0.76

$0.20$0.63

$2.00

$1.12$1.06$0.61

$0.21

U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 2015Q1 ’15 MIDPOINT VS. ’14 MIDPOINT



U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 2015CAPITAL ALLOCATED BY STAGE

Q1 2014

Other11%

Late Stage35%

Series C20%

Series B19%

Series A11%

Seed4%

Q1 2015

Other12%

Late Stage53%

Series C12%

Series B13%

Series A8%

Seed2%


TREND #1: GREATER CAPITAL CONCENTRATION IN SEED DEALS

60% YEAR-OVER-YEAR DECLINE IN DEAL VOLUME

25% YEAR-OVER-YEAR INCREASE IN CAPITAL DEPLOYMENT



Roun

d Siz

e (in

Milli

ons o

f Dol

lars U

SD)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Num

ber o

f Rou

nds

0

300

600

900

1200

1500

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015*

Average Seed Deal Size Median Seed Deal Size Seed Deal Volume

216202

456421542

U.S. SEED DEAL VOLUME VS. ROUND SIZE * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Roun

d Siz

e (in

Milli

ons o

f Dol

lars U

SD)

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

Tota

l See

d Ca

pita

l Dep

loye

d (in

Milli

ons U

SD)

0

100

200

300

400

500

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015*

Average Seed Deal Size Median Seed Deal Size Seed Deal Volume

$397.6$342.6$348.7

$302.7$320.5

U.S. SEED CAPITAL VS. ROUND SIZE * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



TREND #2: LATE STAGE MEGA “PRIVATE IPO”

ROUNDS




U.S. STARTUP FUNDING JAN. 1 - FEB. 15, 201510 BIGGEST DEALS OF 2014

1. Uber - $1.2B2. Cloudera - $900M3. Chobani - $750M4. Cape Wind - $600M5. ABILITY Network - $550M6. Magic Leap - $542M7. Dropbox - $500M8. Snapchat - $485M9. Airbnb - $475M10. WeWork - $355M


Num

ber o

f Rou

nds

0

18

36

54

72

90

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015*

3448

20

30

20

423934

4639

Deals $50M - $100M Deals > $100M

MEGA “PRIVATE IPO” DEAL VOLUME * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



TREND #3: VC ROUND SIZES (AND VALUATIONS) ON THE RISE AS DEAL VOLUMES CONTINUE TO DECLINE


YoY Change in Average Round

Size

YoY Change in Total Capital

YoY Change in Deal Volume

Pre Series A +142% 25% -60%

Series A +52% +24% -19%

Series B +44% +19% +7%

Series C +16% +3% +14%

Late Stage +19% +159% +16%


Roun

d Siz

e (in

Milli

ons o

f Dol

lars U

SD)

$0

$1

$3

$4

$6

$7

$8

$10

$11

Num

ber o

f Rou

nds

0

100

200

300

400

500

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015*

Average Round Size Median Round Size Series A Deal Volume

170176190232210

SERIES A DEAL VOLUME VS. ROUND SIZE * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Roun

d Siz

e (in

Milli

ons o

f Dol

lars U

SD)

$0

$4

$8

$11

$15

$19

$23

$26

$30

Num

ber o

f Rou

nds

0

100

200

300

400

500

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015*

Average Round Size Median Round Size Series B Deal Volume

14097

127132131

SERIES B DEAL VOLUME VS. ROUND SIZE * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Roun

d Siz

e (in

Milli

ons o

f Dol

lars U

SD)

$0

$4

$8

$12

$16

$20

$24

$28

$32

Num

ber o

f Rou

nds

0

100

200

300

400

500

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015*

Average Round Size Median Round Size Series C Deal Volume

8059597770

SERIES C DEAL VOLUME VS. ROUND SIZE * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



TREND #3 EXAMPLE: NEW YORK 36% YEAR-OVER-YEAR DECLINE DEAL VOLUME,

50% INCREASE IN TOTAL CAPITAL INVESTED


YoY Change in Average Round

Size

YoY Change in Total Capital

YoY Change in Deal Volume

Pre Series A +66% -37% -62%

Series A +26% -31% -49%

Series B +35% +45% +8%

Series C -24% -13% +14%

Late Stage +167% +434% +100%



Dol

lars I

nves

ted

(in M

Illion

s USD

)

$0

$300

$600

$900

$1,200

$1,500

$1,800

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 PROJECTION*


NEW YORK CAPITAL ALLOCATION * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Dol

lars I

nves

ted

(in M

Illion

s USD

)

$0

$200

$400

$600

$800

$1,000

$1,200

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015PROJECTION*


NEW YORK CAPITAL ALLOCATION * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015

- WeWork- Harry’s- Rent the Runway

- VICE- AppNexus

- CommonBond- HelloFresh- Taboola



Num

ber o

f Inv

estm

ent D

eals

0

20

40

60

80

100

120

140

160

Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 PROJECTION*


NEW YORK DEAL VOLUME * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Num

ber o

f Dea

ls

0

10

20

30

40

50

60

70



12121111

26

20

9107

108

57

117

14

5

1719

1316

22

2931

29

2427

58

46

63

NEW YORK DEAL VOLUME * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Dol

lars I

nves

ted

(in M

Illion

s USD

)

$0

$20

$40

$60

$80

$100

$120



NEW YORK AVERAGE ROUND SIZES * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015



Dol

lars I

nves

ted

(in M

Illion

s USD

)

$0

$5

$10

$15

$20

$25

$30


Seed Series A Series B Series C

NEW YORK AVERAGE ROUND SIZES * Q1 2015 BASED ON PACE AS OF FEB. 15, 2015


This analysis was created using Mattermark Professional.

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