Venture Funding for Tech Reaches $100 Billion in Third Quarter of 2015

Too much money chasing too few good ideas? JL

Leslie Hook reports in the Financial Times:

Global venture capital investments surged during the third quarter of this year, reaching highs not seen since the dotcom bubble years even as fears of overheating spread in Silicon Valley.
Global venture capital investments surged during the third quarter of this year, reaching highs not seen since the dotcom bubble years even as fears of overheating spread in Silicon Valley.

VC funding reached nearly $100bn during the period, surpassing the total invested during all of 2014, according to figures compiled by investment research firm CB Insights for KPMG, the professional services firm.Some of the biggest increase in investment was in Asia, where three times as much money was put to work as in Europe, according to the study. Venture funding in China has grown particularly quickly, and during this quarter reached four times the level of the same period a year ago. Significant deals included ride-hailing app Didi Kuaidi’s $3bn fundraising, and a $1bn round for LY.com, the Chinese ticket site.

The data have been released at a time when some prominent investors in Silicon Valley are voicing concerns that many tech start-ups are being overvalued. “The bubble may not burst, exactly, it is going to be more of a slow-motion ooze,” said one private equity investor who has worked in tech for several decades.
Many venture capitalists are seeking increasingly defensive terms for their investments, such as ratchet clauses that protect their investment if share prices fall.

The initial public offering pipeline for private companies has also slowed, and some recent tech listings have struggled after going public. Pure Storage, which makes storage systems for data centres, was listed last week, only to see its shares sink below its IPO price within days of trading.

In Europe, deal activity grew to $3.6bn in the quarter, one-fourth the levels of Asia and one-fifth the levels of the US. The UK continued to be the top spot for investment in the region, accounting for nearly a third of the money put to work on the continent. However, UK deal activity fell to a five-quarter low.
The companies on the receiving end of these investments are taking advantage of the boom times. Marco Zappacosta, chief executive of Thumbtack, a services listing start-up that raised $125m earlier this month, told the Financial Times that the fundraising was “definitely not out of need”.
“The honest answer is, we did it because we could,” he said.