Internet and software investing hit peaks last year

Venture capitalists poured more money into Internet and software startups last year than they have since the height of the dot-com boom in 2000.

They also funneled substantial sums to financial services, media and hardware companies, according to a year-end report on investment trends from PricewaterhouseCoopers, the National Venture Capital Association and Thomson Reuters.

The quarterly MoneyTree Report found that VC dollars going to U.S.-based startups rose 61 percent last year to $48.3 billion, mirroring the findings of a Dow Jones VentureSource study released Thursday. The investment total was the largest since 2000, the year before the bubble burst and sent the U.S. economy into a tailspin.

Last year’s investing was driven by a surge of money going to big-dollar expansion and late-stage transactions. For the first time, two deals exceeded $1 billion. Both were rounds in which Uber Technologies raised $1.2 billion.

There also were more than 40 “megadeals,” where more than $100 million was raised, also a first, the MoneyTree Report found. This pushed expansion-stage investing up 102 percent for the year to $19.8 billion, or to 41 percent of the total.

What is interesting is where the money went. Funding for software companies, the biggest category of venture investing, rose 77 percent to $19.8 billion. Internet investing climbed 68 percent to $11.9 billion, even though the deal total dropped 6 percent.

Other categories saw investments accelerate even more:

  • Retail and distribution investments rose 265 percent;
  • Computers and peripherals rose 132 percent;
  • Electronics and instrumentation rose 128 percent;
  • Financial services rose 109 percent: and
  • Media and entertainment rose 93 percent.

Biotech, traditionally the second largest category of investing, saw $6 billion dispersed to startups, an increase of 29 percent from 2013.

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