Venture Capital

Big Money: VC Investing Is Hot in 2014

Senior Entrepreneurship Writer at CNBC
3 min read

Cash-hungry entrepreneurs, get excited: The venture capital industry is on a roll.

In the first three quarters of this year, the venture-capital industry invested more than $33 billion in companies according to the recently released MoneyTree Report jointly produced by PricewaterhouseCoopers LLP and the National Venture Capital Association using data provided by Thomson Reuters. Already, that’s more than the $30 billion invested in all of 2013.

The third quarter (ending in September) marked the sixth consecutive quarter where more than 1,000 companies received venture capital investment, according to the report.

Related: Want Angel Investors? Here's What You Need to Know Right Now. (Infographic)

In the third quarter, venture capitalists invested $9.9 billion in 1,023 deals. That’s a slowdown from the second quarter, when $13.5 billion was invested in 1,129 deals, the report states. Despite the quarter-over-quarter dip, the venture capital industry in the U.S. is seeing a “healthy level of investing,” according to Mark McCaffrey, global software leader and technology partner at PricewaterhouseCoopers, in a written statement.

The software industry receives more venture capital money than any other industry in the U.S. In the third quarter, venture capitalist sunk $3.7 billion into software companies. That’s down noticeably from the second quarter, but that’s because in June, Uber a received a $1.2 billion venture capital investment, making it the largest round the venture capital industry has ever seen.

The media and entertainment industry came in second receiving $1.8 billion for 118 deals while the life science sector fell 35 percent in dollars.

Related: Uber Breaks a Record With Its Latest Funding Round

The venture capital industry has been supported by, in addition to a solid IPO market, the entrance of new sources of money. “The emergence of non-traditional investors, including hedge funds and mutual funds, is contributing to the increase in venture investing this year,” said Bobby Franklin, president and CEO of the National Venture Capital Association, in a written statement.

Also, technology developments grow exponentially. And, entrepreneurs, as a group, are equipped with powerful enough technology to boldly take on industries still dominated by an old guard. Consider how the supercomputer in your pocket -- your smartphone -- has upended the transportation, accommodation and delivery industry. That kind of action gets venture capital investors excited.

“Another factor that can’t be ignored is the changing nature of our economy, where startup companies are disrupting entrenched industries and, in some cases, creating new industries altogether. Traditional and non-traditional venture investors alike recognize this and want to get in on the ground floor of innovation,” said Franklin.

Related: Salesforce Launches $100 Million Fund to Invest in Entrepreneurs Building Apps On Its Platform

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