VC-Backed M&A Jumps in Q3 2015, VC Investing Deals Drop
New reports confirm earlier data that venture-backed M&A activity jumped in Q3 2015. Meanwhile, the number of venture capital investment deals dropped.
There were 127 U.S. deals totaling $17 billion in value in Q3 2015, according to Dow Jones VentureSource. That’s up 30% by number of deals from 98 in Q2 2015, and up 49% in dollars from $12 billion in Q2 2015. However, the quarter was still a drop from the year-ago period, when 138 deals generated $20.1 billion in Q3 2014.
The largest M&A deal of the quarter was Virtustream, which was picked up by EMC Corp for $1.2 billion.
On the public markets, there were 12 IPOs which generated $1.6 billion in Q3 2015, which was down 56% by number of deals and down 37% by dollars from Q2 2015.
Meanwhile, VC investment deal flow dropped, even while overall dollars invested rose. U.S. companies raised $19 billion through 931 deals in Q3 2015, an 11% decrease in number of deals and a 3% increase in dollars invested—companied to the prior quarter, Q2 2015.
On a year over year basis, the number of deals dropped 5%, while dollars invested jumped 68%. The largest drop by stage was at the second round, where the number of deals dropped from 244 in Q2 2015 to 198 deals in Q3 2015. This is the stage where companies are trying to start raising growth capital and a stage where there is less funding to go around than in the more popular early stage seed/Series A or in the later stage growth rounds.
Overall median deal size increased to $6.75 million in Q3 2015 from $5.9 million in Q2 2015 and 5.0 million in Q3 2014—showing the continued popularity of late stage unicorn rounds, as well as larger seed deals.
The largest VC deals in Q3 were SoFi and Uber with $1 billion fundings each, Fanatics with $300 million, DraftKings with $300 million and GitHub with $251 million.
Meanwhile, venture capital fundraising dropped. Data showed that 67 venture funds were raised, totaling $4.71 billion in Q3 2015, a drop of 64% in dollars raised and a drop of 32% in the number of funds raised from the previous quarter. In other words, it wasn’t a great quarter to be fundraising for VC firms.