VC Backed M&A Dips, Venture Funding Drops

By on January 21, 2016

Screen Shot 2016-01-20 at 3.32.59 PMData has confirmed what many in Silicon Valley have been saying for months: venture capitalists are pulling back. M&A and IPOs also dropped in Q4 2015 from the prior quarter.

VC-backed M&A dropped to 120 deals worth $15 billion in Q4 2015, which was down from 135 deals valued at close to $16 billion in Q3 2015. On a year-over-year basis, the drop was even greater, due to a massive Q4 2014, according to Dow Jones VentureSource.

The largest deal of Q4 2015 was Bristol-Myers Squibb Co.’s acquisition of Cardioxyl Pharmaceuticals for $2.1 billion.

Overall for 2015, the number of VC-backed M&A deals dropped 26% to 473, down from 639 deals in 2014.

The IPO market remained relatively slow in Q4 2015, with 15 deals worth $1.3 billion. The number of deals ticked up to 15 from 12 in the third quarter, while dollars raised dropped 17% to $1.3 billion from $1.6 billion in the prior quarter.

Venture Capital Investment

VC investment into U.S. startups dropped in Q4 2015 from the prior Q3 quarter. VC invested in 902 U.S. deals valued at $17 billion in Q4 2015, a 11% drop in capital raised and 4% drop in deals from Q3 2015.

Meanwhile, compared to the year-ago period, the number of deals dropped 10% while dollars invested dropped 7%.

For the full year of 2015, there were 3,916 funding deals worth $72 billion, a 4% drop in deals and 24% increase in dollars from 2014.

Median pre-money valuations dropped 6% from the prior quarter as massive unicorn rounds dropped.

Venture funding in North America also dropped in Q4 2015. Funding was $14.1 billion in Q4 2015, a drop from $20.8 billion in Q3 2015, according to CB Insights. The number of deals from from 1,220 to 1,026 in Q4 2015. In particular, the number of deals worth $100 million or more dropped from 39 in Q3 2015 to 18 in Q4 2015, the lowest quarter of last year. Meanwhile, IPOs have been listing at market capitalizations below their prior private market valuations. That’s causing late stage investors to rethink some of the massive late stage funding deals that had occurred last year.

 

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