Corporate venture capitalists invested $7.6 billion in startups in the United States last year, the largest investment year since 2000, according to the MoneyTree Report put out by PricewaterhouseCoopers, the National Venture Capital Association and based on data from Thomson Reuters.
The funds went into 905 deals, or 21 percent of all venture transactions.
The annual total was up 37 percent in dollars from 2014’s $5.5 billion.
For the fourth quarter, corporate venture investing fell 50 percent in dollars to $1.2 billion.
Corporate Venture Investment to Entrepreneurial Ecosystem Hits Fifteen Year High in 2015
Corporate Venture Groups Participated in One Fifth of All Deals and Provided 40 Percent of Investment in Industrial/Energy Companies
WASHINGTON, DC – Corporate venture groups deployed over $7.5 billion in 905 deals to high-growth startups in the entrepreneurial ecosystem in 2015, accounting for 13 percent of all venture capital dollars invested for the year and 21 percent of all deals, according to the MoneyTree™ Report by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters. For the fourth quarter, corporate venture capital investment totaled $1.2 billion in 199 deals, representing 10.3 percent of dollars invested and 21 percent of deals for the quarter.
“In keeping with the trend we witnessed throughout the year, corporate venture groups continue to play an increasingly active role the entrepreneurial ecosystem, seeing the merit in investing in startups to both fund innovation and meet their strategic goals,” said Bobby Franklin, President & CEO of NVCA. “It’s encouraging to see corporate venture groups developing more of a taste for early stage investing. As we move into a new year, we’ll be keeping a close eye on this shift as well as tracking corporate venture investment into energy companies to see if they remain over-weighted in the sector as compared to overall venture investing trends.”
As has been the trend with overall venture investing, software companies continue to receive the largest amount of corporate venture dollars, drawing $2.5 billion in 389 deals in 2015, representing 32.6 percent of all corporate venture dollars deployed. As a share of overall venture investing in software companies, corporate venture accounted for 10.5 percent of venture dollars deployed to the sector in 2015. For the fourth quarter, corporate venture groups invested $287 million into software companies across 84 deals, representing 24.6 percent of dollars invested.
Biotechnology companies received the second largest amount of corporate venture dollars in 2015, attracting $1.2 billion across 133 deals, accounting for 16.3 percent of dollars deployed by corporate venture groups. As a share of overall venture investing in biotechnology companies, corporate venture accounted for 16.7 percent of venture dollars deployed to the sector in 2015, which is slightly over-weighted as compared to overall venture investment trends. For the fourth quarter, corporate venture groups invested $254 million into biotechnology companies through 25 deals, representing 21.7% of all corporate venture dollars invested during the quarter.
Industrial/energy companies received the third largest amount of corporate venture dollars in 2015, receiving $1.2 billion in 46 deals, representing 16.1 percent of dollars invested. As was the case throughout 2015, corporate venture investment in industrial/energy companies continued to be over-weighted as compared to overall venture investment into the sector. In 2015, corporate venture groups accounted for nearly 40 percent of all venture investment into industrial/energy companies. For the fourth quarter, corporate venture groups deployed $54 million to industrial/energy companies in 11 deals, representing 4.6 percent of all corporate venture dollars invested for the quarter.
Stage of Investment Analysis
Recent reports suggesting that corporate venture groups are participating more in early stage funding rounds is supported by end of year data. For 2015, corporate venture groups deployed $2.4 billion to early stage companies in 442 deals, representing 31% of total corporate venture dollars invested for the year. End of year reporting indicates that corporate venture groups continued to be over-weighted in later stage deals, deploying $2.7 billion in 159 deals to later stage companies, accounting for 35.7 percent of all corporate venture dollars invested in 2015.
For the fourth quarter, corporate venture groups deployed $650 million through 98 deals to early stage startup companies, representing 55.7 percent of all dollars invested for the quarter. Expansion stage companies received the second largest amount of corporate venture dollars for the quarter, receiving $273 million in 56 deals, representing 23.4 percent of all corporate venture dollars invested for the quarter.
Venture capitalists are committed to funding America’s most innovative entrepreneurs, working closely with them to transform breakthrough ideas into emerging growth companies that drive U.S. job creation and economic growth. As the voice of the U.S. venture capital community, the National Venture Capital Association (NVCA) empowers its members and the entrepreneurs they fund by advocating for policies that encourage innovation and reward long-term investment. As the venture community’s preeminent trade association, the NVCA serves as the definitive resource for venture capital data and unites its over 300 member firms through a full range of professional services. For more information about the NVCA, please visit www.nvca.org.