The MoneyTree Report: Insights into the Startup Sphere

The MoneyTree Report: Insights into the Startup Sphere

As a collaboration between two powerhouses, PWC and the National Venture Capital Association, the MoneyTree Report is one of the most anticipated studies on capital investment. Released quarterly, this summary of the US state of affairs, based on data from Thomson Reuters, paints a definitive picture on the sphere emerging companies operate within. The most recent report is no exception, offering interesting insights into the startup ecosystem.

What’s the good news?

“The venture ecosystem surpassed the $10 billion mark for the fifth consecutive quarter, setting the stage for what we expect to be another busy year for startup investing” Bobby Franklin, President and CEO of the National Venture Capital Association NVCA.

In 2016 so far, according to the report, we’ve seen the highest first quarter for dollars invested since 2000. As testified by the NVCA CEO above, the report found positive trends for the startup sphere, and isolated Software as the industry receiving the highest amount of funding of all. 

This was then followed by Biotechnology, and the Industrial/Energy Industries. Additionally, internet-specific companies saw a 4 per cent increase of investment dollars, which is small but significant.

What stages of development saw increased investment?

The report also tracks investment trends across the spectrum of development, looking at where investors are directing their funds. For example, there was a 50% rise in investments in later-stage companies, hitting $4.2 billion going into 207 deals, and accounting for 20% of total deal volume, up from the prior quarter. Topping this, however, was the soaring of expansion stage investment, up 112% in dollars, at $8.5 billion.

What other developments have taken place?

In another interesting increase for startup dollars, the top 10 deals this quarter accounted for 39% of total dollars invested. This is owing to the impressive fact there were three deals valued at one billion dollars or more. To put this in comparison with previous years, 2015 saw a total of three deals, and 2014 had only two deals at one billion dollars or greater.

“We continue to see things we have never seen before, including megadeals, investments of $100 million or more” – Bobby Franklin

Overall, with a 20% increase in total venture dollars deployed to startup companies during the quarter, there was healthy investment in startup companies. The reports findings of what industries are continuing to attract the healthiest investment, as well as which stage captures more venture capital, provides prudent insight into investment activity. 

Expansive crowdfunding regulation is necessary to ensure the industry is able to keep apace with the large sums, including the megadeals mentioned by NVCA CEO Bobby Franklin, are able to be captured by crowdfunding platforms. With such a healthy ecosystem in place for startup companies, this is good timing for the crowdfunding industry to strike.

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