“A Record Year for Venture Funding and a Solid Year for M&A”
After two strong years of venture funding and M&A in 2012 and 2013, there was general consensus that the market would cool down in 2014. After two $1B dollar venture funding years, we would see figures drop back to $800M or possibly lower. M&A would stay active but 20 to 25 transactions seemed like a reasonable forecast. Well, we ended up with a record $2.3B in venture funding and M&A topped out at 31 deals worth $3.2B in consideration. There was not one “hot” segment but rather a broad range technologies, products and business models supported by M&A and venture funding. The current consensus is that the market is not going to slow down in 2015 and that we are still in the early days of significant technology innovation and market disruption. Will 2015 match the current market sentiment? Our take is that M&A will be strong in 2015, driven by the incumbents renewed appetite for early stage companies and that venture funding will pull back closer to $1B, unless we see more $900M rounds like Cloudera. Highlights include:
2014 finished with a total of 31 deals, up 24% from 2013. Total consideration in 2014 was $3.2B, significantly less than 2013, 2011, 2010 and 2006 due to the lack of mult-billion dollar deals and the lack of +$100M deal
Of the 31 deals in 2014, 24 were technology focused with a median deal size of $23M and a price to revenue multiple of 6.0X. The remaining 7 transactions were business focused with a median deal size of $355M and a price to revenue multiple of 2.9X.
2014 storage related venture funding was at an all-time high at $2.4B, led by Cloudera’s $900M 6th round, Pure Storage’s $225M 6th round, and Box’s $150M Later round.