EY Venture Capital Insights 4Q14

Venture Capital Insights
4Q14
Global VC investment landscape
January 2015
Insights development team
Bryan Pearce, Global Leader, Entrepreneur of The YearTM and Global

Venture Capital Advisory Group, EY
Jeff Grabow, United States, Venture Capital Leader, EY
Sandra Feldner Vandergriff, Venture Capital Advisory Group, EY
Shanta Kumari, EY Knowledge, EY
Vidhi Gupta, EY Knowledge, EY
* All data contained in this is sourced to Dow Jones VentureSource unless otherwise noted.
Page 1
Venture Capital Insights 4Q14
Section 1: Global VC investment landscape

Analysis by geography, hotbed, sectors, stages of development and round
classes
Page 2
Section 1: Global VC investment landscape

Summary
Global VC investment activity:
2014 was a record year in terms of VC investment activity. The year saw US$86.7b invested in 6,507 deals,
hitting the highest annual investment mark since 2000. Strong investment activity was seen in the second
and fourth quarters of 2014, with both quarters recording more than US$20b funding with more than 1,500
deals each.
In terms of quarterly VC investment, the average deal size was the highest for 4Q14 (US$16.7m) compared
to the average values in 1Q08, which remained below US$14m.
In 2015, global venture capital-backed deal activity is likely to continue its current upward trend driven by a
consistent pipeline of new IPO listings along with improved investor confidence.
The Bay Area maintained its lead during 2014 with amount invested almost twice the levels seen in 2013.
Beijing made a comeback in the top five hotbeds replacing UK, recording a 237% increase in the amount
invested compared to 2013.
The consumer services sector continued to lead the global VC landscape in terms of the amount invested in
2014 driven by large-sized funding deals of mobile-based platform companies such as Uber Technologies,
Snapchat, Instacart and Flipkart International Private Limited.
Investments at the later stage almost doubled in 2014 compared to the historical levels. A similar trend was
also seen for investments made in companies operating at generating revenue stage.
VC investors made larger investments in the early stage round classes as noted by the increased median
deal sizes for most markets in 2014. During the year, the median deal size also increased across all stages
of development, and across all VC geographies, compared to 2013.
Page 3
Global venture capital investment

2014 was a record year in terms of VC investment activity; the highest
since 2000
100
90
51.1
35.6
56.0
49.8
6,085
6,040
5,500
53.5 6,551
86.7 6,507
19.9
7,000
26.1
6,000
5,458
80
4,813
26.1
70
5,000
60
50
13.0
10.1
40
30
20
10
13.8
13.7
1,361
11.4
2008
9.7
15.5
1,516
1,550
11.3
1,542
14.5
11.8
14.5
13.9
13.5
6.8
9.9
13.0
11.2
10.9
2009
2010
2011
2012
2013
8.7
8.5
13.6
1,531
14.6
13.1
15.2
4,000
19.9
3,000
1,808
23.1
2,000
1,560
19.9
17.6
2014
Amount invested during Q1 (US$b)
Number of rounds during the year/qtr
Number of rounds during Q4
26.1
1,560
1,620
Q3
Number of rounds
Amount invested (US$b)
46.6
1,000
0
Q4
Global VC activity by amount invested and number of rounds
2014 closed on a strong note in terms of global VC investment. With US$86.7b funded through 6,507 deals, the year hit the highest annual investment mark in the last 13
years. Investment activity was particularly strong in the second and fourth quarters, with both quarters recording over US$20b funding and each with over 1,500 deals for
the quarter.
4Q14 was also the strongest quarter since 3Q00 in terms of quarterly VC investment. The last quarter of 2014 recorded US$26.1b invested in 1,560 deals a 31% increase in
value despite a 4% decline in deal volume compared to 3Q14. Subsequently, the average deal size was the highest during 4Q14 (US$16.7m )compared to the average values
recorded since 1Q08 where it remained below US$14m.
The outlook for VC investing and VC-backed companies remains positive as improving economic conditions continue to support the global fundraising environment. In 2015,
global VC-backed deal activity is likely to continue its current upward trend driven by a consistent pipeline of new IPO listings along with improved investor and general partner
confidence.
Note: Global total includes the US, Europe, Canada, China, Israel (all site) and India only.
Page 4
Venture capital investment by geography

2014 had the highest level of VC investing seen in the US, Europe and China
VC investment continued to be strong in the US and China during 4Q14 driven by

few mega-deals that were more than US$1b each with Uber and Beijings Xiaomi
Technology Co Ltd, leading the top quarterly deals, funding dropped by 29% in
Europe, compared to 3Q14 due to slow activity across all industry sectors. Deal
volume did not see much change in any of these markets.
The current trend across the key VC markets suggests VC investing will maintain its
momentum through 2015. As investor confidence continues to build with improving
market conditions and investment returns on upswing, strong levels of investing is
likely to be seen in the year to come.
US
6.5
2.5
3,785
3,837
3,682
6.8
4,000
50
3,100
40
30
20
10
3,204
2,794
3,000
8.2
9.3
9.6
9.6
10.8
8.0
9.5
6.2
9.2
9.6
6.7
9.2
7.6
8.4
6.1
711 6.3
9.1
0
2008
3,500
13.8
848
7.7
889
918
4.7
5.4
8.2
7.8
2009
2010
2011
2012
2,500
11.2
2,000
932
15.0
8.7
1,013
12.1
7.6
928
814
1,500
1,000
814
500
11.2
13.8
Q3
Q4
0
2013
Number of rounds during the year/quarter
2.0
1.9
2.7
3.1
1,460
1,421
1,379
1,314
2.7
6.8
1,800
18
1,600
16
1,400
2014
1,200
1.9
2.4
2.0
2.6
2.1
1.3 452
1.1
1.1
2009
1.4
1.6
1.4
2010
1,000
430
1.4
1.8
374
373
2.0
1.9
2011
800
2.3
1.8
2.3
442
3.1
1.6
1.4
2012
337
461 3.1
332
2.0
1.6
2013
2.1
2014
3.1
Q3
600
332
2.2
Q4
400
5.3
7.5
10.0
6.5
4.0
9.6
5.0
10.0
740
800
700
14
600
12
10
423
375
465
335
200
0.7
1.4
1.8 85
1.2
2008
6.8
400
2.0
1.1
1.7
1.8
3.0
1.4
3.4
1.4
116
1.1
2.0 0.9 1.5
136
0.9
1.5
128
86
112
0.8 0.7
1.2
2.4
1.8
0.7
1.2
2.4
0.5
2009
2010
2011
2012
2013
2014
500
320
8
6
439
300
243
207
243
3.0
6.8
Q3
Q4
200
100
0
Number of rounds
2.2
Number of rounds
5.1
Median amount invested (US$m)
2.1
1,431
10
Page 5
5.5
4,500
3,683
2.1
1,502
2008
4.1
1,636
4.1
12
2.2
4.9
China
2.9
4.3
60
1.8
5.0
Europe
Number of rounds
In 2014, VC funding was at its all time high for the three key VC markets the US,
Europe and China compared to the levels seen globally in 2008. During the year,
while investments increased by 47% and 27%, respectively, for the US and Europe,
it almost tripled for China compared to 2013. Strong activity in the information
technology and consumer services sector drove this increase in China.
Venture capital investment by geography

India continued to see a surge of VC activity in 4Q14 driven by consumer
services sector deals
Even on a yearly basis, the growth in VC activity for Canada and Israel was
relatively slower compared to other VC markets. During 2014, while Canada saw
21% increase in funding, Israel recorded 10% increase over the prior year, with a
marginal change in deal volume.
India was an exception, among the smaller markets, where VC investments
continued on the upward trajectory in 4Q14 in India, closing the year with US$5.2b
through a total of 260 deals (highest aggregate value and volume since 2008). The
two mega deals of nearly US$700m of consumer services sector-based Flipkart.com
and Snapdeal.com in 4Q14 drove 35% increase in investments compared to 3Q14.
Canada
5.0
91
5.3
0.1
1
0.3
0.1
4.3
5.0
6.0
6.3
0.5
Page 6
201
0.6
185
165
0.4
0.9
2009
28
23
0.4
0.2
0.2
0.2
0.1
0.1
0.1
2008
2009
2010
7.3
9.0
0.2
0.4
0.4
2011
0.3
39
0.4
0.3
0.3
0.2
0.2
0.4 47
50
38
47
0.4
0.4
Q3
Q4
0.4
0.2
0.2
0.2
2012
2013
2014
167
0.4
0.4
0.4
196
200
0.6
150
0.5
100
0.7
0.3 53
41 0.2
0.7
62 0.5
0.3
0.3
0.3
0.3
0.4
2010
2011
2012
2013
2014
45
45
42
45
0.5
0.6
Q3
Q4
50
0
4.2
6.7
5.0
3.8
4.0
6
252
241
2008
24
100
-50
4.5
5.0
4.7
300
260
250
186
4
3
121
200
2.3
121
150
98
2
0.2
0.4
1
0
1.0
0.2
2008
0.3 38
26
0.1
0.1
0.2
2009
0.4
0.4
0.4
0.4
35
0.3
0.2 0.2
0.2
2010
2011
43
0.4
0.5
0.3
0.4
2012
59
0.4 71
0.5
1.7
0.7
0.6
0.4
0.5
2013
2014
68
79
1.7
2.3
Q3
Q4
100
79
50
0
Number of rounds
0.3
0.2
0.2 26
0.4
65
7.2
Number of rounds
0.8
150
250
0.2
0.3 53
0.2
0.2
200
India
0.2
71
4.4
114
300
0.6
5.0
169
142
Number of rounds during the year/quarter
0.3
3.5
292
181
2.3
186
110
350
0.5
2.8
5.0
151

4.0
4.9
Amount
invested during Q1 (US$b)
2
0
Israel (all site)

5.2
4.3
Number of rounds
During 4Q14, investment activity remained soft in the smaller VC markets namely,
Canada and Israel. For both markets, the funding level in the last quarter of 2014
was mostly in line with the levels seen during 2Q14 and 3Q14. This was despite an
increase in deal volume recorded during 4Q14 for both markets 24% for Canada
and 7% for Israel compared to the 3Q14.
Venture capital investment by hotbed

Beijing was the second-most preferred VC destination after the Bay Area in 4Q14
Updated
2009
2011
2013
2014
Top five hotbeds1

US$17.6b
(74% of the total2)
Top five hotbeds1

US$28.2b
(71% of the total2)
Top five hotbeds1

US$27.0b
(70% of the total2)
Top five hotbeds1

US$46.7b
(74% of the total2)
Amount invested
(US$m)
8,791
Bay Area
Bay Area
New England
3,274
S. California
NY Metro
UK
Germany
France
Amount invested
(US$m)
2,280
1,817
1,480
1,034
957
14,154
Amount invested
(US$m)
Bay Area
13,917
4Q14
Top five hotbeds1
US$13.0b
(74% of the total2)
Amount invested
(US$m)
24,763
Amount invested
(US$m)
Beijing
New England
3,820
Beijing
NY Metro
3,637
NY Metro
5,333
NY Metro
New England
4,788
New England
1,280
4,082
S. California
1,077
3,347
UK
Israel (All Site)
2,005
1,990
S. California
3,256
UK
2,428
S. California
Beijing
2,292
Germany
Germany
2,038
UK
7,713
2,858
Bengaluru
757
2,707
UK
657
Beijing
916
Potomac
1,637
Israel (All Site)
Bengaluru
2,248
Shanghai
629
880
France
1,282
Potomac
1,172
Shanghai
2,083
Israel (All Site)
588
Potomac
658
Canada
1,208
France
1,164
Israel (All Site)
1,930
Illinois
425
1,120
Canada
1,358
Germany
406
1,250
Canada
388
862
Potomac
325
822
France
274
Canada
557
Shanghai
Shanghai
414
Germany
823
Shanghai
789
France
Illinois
408
Illinois
756
Bengaluru
598
Illinois
Switzerland
385
Bengaluru
113
Switzerland
Bengaluru
1,184
384
317
Canada
Illinois
Switzerland
497
413
Potomac
Switzerland
547
Switzerland
104
1,326
Israel (All Site)
1,753
122
3,724
4,019
3,869
2,851
5,631
281
S. California
Beijing
Number
of rounds
Bay Area
Bay Area
New England
NY Metro
Top five hotbeds1

659
(61% of the total2)
104
87
65
27
69
50
45
22
66
47
28
59
9
With strong activity in the business and financial services and consumer services sectors, the Bay Area maintained its dominance during 2014 with amount invested, which was
almost twice the levels seen in 2013 US$24.7b in 2014 compared to US$13.9b in 2013.
During 2014, Beijing made a comeback into the top five hotbeds replacing the UK, recording a 237% increase in the amount invested compared to 2013. During the year, VC
investors actively invested in the region particularly consumer information services sub-sector with a focus in the shopping facilitator space.
In 4Q14, Beijing was the second-most preferred VC destination after Bay Area, reaching a 120% increase in VC funding when compared to the previous quarter due to
significant investment activity in the consumer services and information technology sectors. During the current quarter, the hotbed saw a US$1.1b deal in the software sectorbased Beijing Xiaomi Technology, which was the largest deal in China and also the second-largest deal of the entire quarter.
Note: 1 Top five hotbeds by amount invested. 2 Total of 15 major VC hotbeds listed above.
Page 7
Venture capital investment by industry

Driven by big ticket deals, consumer services dominated in both value and
volume in 2014
Updated
Number of rounds
2011
Business and financial services

Consumer goods
186
1,475
181
1,670
2011
2012
9.9
2.1
13.4
4.7
Information technology
362
3Q14
20.2
4Q14
4.8
0.4
12.6
0.4
29.0
1.7
429
5.3
1.7
1.7
31
6.8
0.3
10.0
0.6
12.7
Healthcare
Industrial goods and materials
2.5
236
39
2014
1.5
11.7
Energy and utilities
30
1,554
12.1
427
267
145
2013
1.4
Consumer services
35
1,738
9.4
424
1,064
213
1,745

Consumer goods
121
359
40
1,690
1,130
214
4Q14
426
60
1,544
1,095
3Q14
1,682
226
163
1,179
253
2014
1,535
218
1,332
240
Healthcare
2013
1,163
191
Consumer services
2012
1,170
11.0
2.4
2.1
11.7
2.1
10.4
11.3
14.0
4.7
11.5
3.4
0.7
14.7
3.4
2.5
2.8
4.0
By number of rounds:
In 4Q14, the information technology and the consumer services sectors drove VC activity in deal volume. These two sectors recorded close to 430 deals each, cumulatively
accounting for 55% of the total VC deals for the quarter.
On a yearly basis however, VC investors preferred to invest in the consumer services sector in 2014 more than in the information technology, which was the leading sector for
the last three years. With 1,690 deals, the consumer services sector led all sectors, closely followed by the business and financial services sector with 1,682 deals.
By amount invested:
Driven by large-sized deals of mobile-based platform companies such as Uber Technologies, Snapchat, Instacart and Flipkart.com, the consumer services sector continued to
dominate the global VC landscape in terms of the amount invested in 2014. The sector attracted US$29b of investment for the year the highest amount invested in the sector
in the last six years.
The consumer services sector maintained its dominance during 4Q14 with deal value increasing by 46% over the previous quarter. The average deal size surged to US$23.4m
in 4Q14 from US$16.1m in 3Q14 as the sector continued to attract bigger ticket deals in the current quarter.
Note: There are also some deals for which sector has not been assigned.
Page 8
Venture capital investment by country

In 2014, VC investing in China and India surged to three times the levels seen
in 2013
Number of rounds
2011
US
Canada
2013
3,785
3,683
Europe
China
2012
465
185
India
186
740
186
167
169
201
241
196
252
260
4Q14
814
928
337
332
207
243
1,460
439
151
3Q14
3,682
1,636
320
142
Israel
3,837
1,421
1,379
2014
38
47
42
45
79
68

2011
US
2012
Europe
China
2013
34.6
36.4
7.5
6.4
7.3
5.0
Canada
1.2
0.9
Israel
2.0
1.2
India
1.6
1.6
2014
8.3
3Q14
52.1
35.5
10.6
3.1
15.5
4.8
4Q14
13.8
11.2
2.2
6.8
3.0
1.1
1.4
0.4
0.4
1.8
1.9
0.5
0.6
5.2
1.7
2.3
2.0
By number of rounds:
During 2014, the number of deals declined in all markets except for China and India, compared to 2013. China, in particular, saw a huge jump of nearly 70% in the deal volume
largely driven by consumer services sector, the sector saw an influx of 248 in 2014 compared to 111 in 2013 of VC deals from consumer information services sub-sector
in 2014.
In the US, deal volume declined by 12% in 4Q14 compared to the previous quarter, as investors participated in a smaller number of deals in all industry sectors except for
information technology. Europe also saw a marginal fall of 1% in deal volume, while deal activity increased in all other markets during the same period.
By amount invested:
Investment activity across markets flourished during 2014 as the year recorded the highest investment levels since 2000. In 2014, VC investors seemed particularly interested in
the two emerging markets India and China both of which saw almost a threefold increase of in funding levels compared to 2013.
The last quarter of 2014 was particularly strong in the US, China and India compared to 3Q14, these markets saw a few megadeals that closed near the end of the quarter. For
other markets, VC investing slowed or remained at a similar level as seen in the previous quarter.
Page 9
Venture capital investment by round class and stage of development

Investments at later stage almost doubled in 2014 compared to historical levels; a similar trend was seen
for investments made in companies operating at generating revenue stage
Updated
By round class
Number of rounds
2011
Seed round
2012
638
2013
768
First round
746
1,062
Later stage
91
685
2,673
1,240
1,552
4Q14
98
2,682
999
1,647
3Q14
455
2,392
2,314
Second round
2014
1,343
1,541
657
341
1,728
323
427
416

2011
Seed round
2012
0.6
2013
0.5
First round
0.5
12.2
Second round
10.8
3Q14
0.4
10.7
4Q14
0.1
11.1
8.3
Later stage
2014
14.0
11.0
0.1
3.6
16.3
4.0
3.7
5.1
15.9
28.3
26.2
27.5
48.7
10.2
By stage of development
Number of rounds
2011
Startup
566
Product development
2013
612
1,450
Generating revenue
Profitable
2012
532
1,323
3,701
233
3Q14
67
292
1,287
3,913
316
2014
67
279
1,117
4,822
4,451
278
4Q14
255
1,222
52
274
1,173
65

2011
Startup
12.3
Generating revenue
Page 10
2013
0.8
Product development
Profitable
2012
1.1
8.9
36.7
5.9
3Q14
0.5
8.9
36.6
3.4
2014
0.6
0.1
11.6
39.8
4.1
2.8
65.3
9.2
4Q14
0.1
3.5
14.7
2.3
19.8
2.7
Median round size by round class

VC investors made larger investments in the early stage round classes as
suggested by increased median deal sizes for most markets in 2014
Updated
Seed round (median round size in US$m)
First round (median round size in US$m)
During 2014, the median deal size at seed round class stage increased in all markets except for Israel
which saw a marginal decline with median value decreasing from US$0.7m in 2013 to US$0.6m in
2014, suggesting investor sentiment remains positive. VC investors preferred to make bigger
investments in young startups globally.
0.2
0.3
0.6
0.5
0.5
0.4
13.7
7.9
10.0
12.2
10.7
11.1
14.0
304
391
638
768
746
455
2,211
1,685
1,966
2,314
2,392
2,682
2,673
7.7
4.5
2.2
3.3
1.7
3.1
1.6
3.0
1.6
3.0
1.6
2.6
3.0
1.6
1.3
3.4
5.0
3.0
2.0
4.0
3.0
1.8
4.0
2.8
2.3
3.5
1.6
0.1
0.2
4.1
0.5
0.6
0.5
5.0
4.0
4.0
6.0
2.1
1.0
0.9
0.7
0.7
0.7
0.4
0.3
0.3
NS
NS
NS
NS
NS
NS
0.6
0.3
0.3
0.4
0.5
0.4
0.7
0.8
0.5
0.6
0.7
0.5
0.6
0.6
0.6
0.8
0.8
0.7
0.6
0.6
0.9
1.0
0.9
10
2.8
1.5
3.2
2.0
3.0
3.3
No. of global deals
0.3
340
3.0
3.5
4.0
Amount invested
globally (US$b)
Investors made larger investments in early stage round classes in 2014, reflected by increased
median round size in all VC markets. China saw the strongest growth of 50% in 2014, compared
to 2013, followed by Canada, which saw 38% growth. While the US and Europe growth rate was
almost 20% each, India and Israel, each showed a marginal growth rate of nearly 10%.
0
2008
2009
2010
2011
US
2012
2013
Europe
2014
China
2008
Canada
Second round (median round size in US$m)
2009
Israel (all site)
2010
2011
2012
2013
2014
India
Later stage (median round size in US$m)
While the two mature VC markets US and Europe saw 8% and 22% increase, respectively in the
median value in 2014, the two emerging economies China and India recorded 48% and 35%
increase, respectively, over 2013. This reflects investor preference to make bigger investments in the
emerging markets in anticipation of earning higher returns. The median value, however, declined by
19% and 29% in Canada and Israel respectively.
Median deal sizes grew significantly in 2014 compared to 2013, particularly in the smaller VC
markets. The growth was the steepest in Canada, where the median value increased to almost
3.5x during 2014. For India and Israel the median value almost doubled to reach US$20.2m and
US$14.9m in 2014 from US$10.3m and US$8.0m in 2013, respectively.
8.3
10.8
8.3
11.0
16.3
22.2
17.5
24.8
28.3
26.2
27.5
48.7
1,025
1,054
1,062
999
1,240
1,343
1,476
1,467
1,676
1,647
1,552
1,541
1,728
2009
2010
2011
2012
2013
2014
Note: Chart scales vary for the purpose of clarity.
Page 11
2011
2013
15.0
14.9
20.2
13.0
7.6
4.5
8.0
10.3
22.1
2012
10.0
6.5
8.8
10.0
8.5
10.0
7.3
2010
19.0
20.0
2009
7.3
11.0
10.0
2008
10.0
5.5
7.7
5.3
10.0
8.9
9.8
10.8
2008
8.0
4.4
7.3
5.7
5.9
11.5
4.8
6.3
8.1
6.5
4.0
12.5
5.9
8.8
6.0
8.0
6.0
3.3
5.5
3.0
8.0
5.3
5.0
10.6
35
30
25
20
15
10
5
0
10.0
5.9
8.7
9.5
9.0
12.0
5.0
2.5
5.1
5.8
3.8
12
8.0
16
10.0
20
32.5
7.6
1,084
18.5
11.4
No. of global deals
10.0
5.0
6.0
9.0
6.0
2.9
15.0
6.9
8.0
7.9
5.5
3.3
15.4
6.0
5.4
6.1
Amount invested
globally (US$b)
2014
Median round size by stage of development

In 2014, median deal size increased for almost all VC markets, across all stages,
compared to 2013
Updated
Startup (median round size in US$m)
Product development (median round size in US$m)
0.8
0.9
1.1
0.8
0.6
0.5
17.5
11.4
13.0
12.3
8.9
8.9
11.6
376
358
566
612
532
292
1,668
1,427
1,580
1,450
1,323
1,287
1,117
4.0
2.5
5.0
3.0
4.0
US
Europe
2014
2008
China
Canada
Generating revenue (median round size in US$m)
Israel (all site)
2010
2011
2012
2013
4.8
5.0
0.5
2.8
3.0
2.6
4.3
2.2
3.3
1.7
0.8
1.5
2.0
3.2
3.3
3.7
1.3
3.6
6.0
4.4
0.4
5.0
5.0
2009
1.9
3.0
2013
1.8
0.8
0.3
0.6
0.3
0.9
0.2
2012
2.1
0.9
0.4
0.5
0.5
0.6
0.5
2011
2010
1.0
0.7
1.5
NS
1.0
0.6
1.0
0.7
1.0
0.9
1.8
3.0
2009
7.0
2.6
2.7
3.3
4.5
6.3
10
9
8
7
6
5
4
3
2
1
0
6.7
2008
1.0
0.7
1.4
1.4
1.2
NS
1.0
0.8
1.9
1.5
1.5
NS
2.5
NS
1.2
0.9
8
7
6
5
4
3
2
1
0
8.7
1.1
370
7.5
Amount invested
globally (US$b)
No. of global deals
In the US, the median value rebounded in 2014 to reach 2011 levels after seeing a consistent
decline over the past two previous years. Among other markets, China recorded the highest
growth rate of more than 250% in 2014 compared to 2013. In Europe, Canada and Israel it stood
at 69%, 71% and 12%, respectively. India was the only exception that saw close to an 80%
decline in values for the same period.
3.9
4.2
4.0
In 2014, the median deal size increased compared to 2013 for all VC markets, except for Canada for
which the median values were did not have enough of a sample size to calculate a median. India and
China saw the highest increase in median values seen in 2014, which were almost triple the size for in
2013, in both countries.
2014
India
Profitable (median round size in US$m)
Median deal size increased across all VC markets in 2014 compared to 2013. The increase was most
significant in China and Canada, where median values almost doubled compared to levels of 2013. At
US$10m, the median value in China reached its highest level in six years. This is because majority of
the Chinese companies which received larger/mega investments for the during the year were
operating at generating revenue stage.
On the back of large-sized financing deals, the median values in the US and India increased in
2014 compared to 2013, to reach the highest levels ever seen since 2008. The median values
increased even for Europe and Canada 42% and 33%, respectively during the same period.
China and Israel were the only exceptions that saw median values declining by 7% and 26%,
respectively in 2014 over the previous year.
36.7
36.6
39.8
65.3
5.4
3.5
5.6
5.9
3.4
4.1
9.2
3,159
3,701
3,913
4,451
4,822
416
302
359
316
223
278
274
2008
2009
2010
2011
2012
2013
2014
Page 12
2010
2011
2012
2013
13.0
5.6
10.0
10.0
7.7
36.0
5.1
3.9
10.7
7.5
10.4
NS
7.0
9.2
18.5
6.2
4.0
9.8
8.0
20.0
NS
2009
9.1
3.6
2008
6.1
5.6
6.9
14.6
8.5
5.0
5.0
2.9
5.7
7.9
NS
5.1
70
60
50
40
30
20
10
0
8.0
3.9
7.0
NS
9.0
7.2
7.0
4.3
4.3
5.9
2.5
6.0
4.0
2.5
5.0
1.9
5.0
8.0
3.3
4.8
4.0
2.4
5.5
5.0
5.0
2.1
5.1
8.6
5.0
6.0
6.4
5.0
2.4
7.3
3.6
4.4
5.1
2.1
5.0
3.0
10
7.0
12
60.0
27.1
2,698
10.0
19.8
3,035
10.0
9.0
27.1
No. of global deals
7.3
5.5
6.0
8.0
Amount invested
globally (US$b)
2014
Section 2: Global VC exit landscape IPO and M&A

Analysis by geography
Page 13
Section 2: Global VC exit landscape IPO and M&A

Summary
Global VC-backed IPOs
2014 saw increased IPO activity across all VC markets compared to 2013. In Europe and China, deal volume grew to
3x and 4x of levels seen in the previous year, respectively; the US recorded a growth of 42% for the same period.
In 2014, Canada and Israel saw the highest number of IPOs since 2008, while India did not see any change in IPO
deal volume.
The US continued to dominate in terms of dollar amount raised via IPO, followed by China in 2014.
Europe recorded the strongest growth in IPO proceeds more than 600% driven by the IPO exit of Rocket Internet AG,
which raised US$1.8b in the last quarter of 2014.
The smaller VC markets also gained momentum during 2014, with Canada and Israel seeing their highest levels of IPO
proceeds in the last six years.
Global VC-backed M&As
The US and Europe continued to see a high numbers of M&A deals in 2014, when compared to 2013, while the number
of deals increased by 19% in Europe, the US saw a marginal increase of 8% during 2014.
For other markets, including China, the number of M&A deals either declined or remained at the similar level compared
to the last year. For China, despite a 17% decline in 2014, M&A deal volume during current year was much higher than
the yearly totals of 20082012 period.
For the two key VC markets US and China the amount raised through VC-backed M&A exits was at its all-time high
in 2014 since 2008. Strong M&A activity in the US was lifted by a megadeal with WhatsApp Inc. being acquired by
Facebook Inc., resulting in a post M&A valuation of almost US$20.0b. Deals based in the software sector lead to 200%
increase in China in 2014 compared to the previous year.
Page 14
Global VC-backed IPO

IPO activity grew across markets in 2014 with Europe recording the strongest
growth compared to the previous year
Number of IPO exits
7
141
6
105
100
12 12
2008
46
50
55
18
4
61
47
45
74
48
16
16
15
2009
2010
US
2011
2012
Europe
2008
2009
2013
2014
18
2010
China
1 1
2011
Canada
2012
2013
India
2014
Israel
During 2014, IPO activity remained strong in the three key VC markets the US, Europe and China supported by improved economic conditions, better investment returns and
high investor confidence levels. In Europe and China, deal volume grew to 3x and 4x of levels seen in 2013, respectively and the US recorded a growth of 42% for the same
period. Canada and Israel recorded the highest number of IPO deals in 2014 since 2008, while India did not see any real change in IPO deal volume.
2008
2009
Europe
2014
2008
2009
China
India
2012
233
91
11
20
NS
156
2011
NS
24
105
504
2010
Canada
46
42
NS
NS
NS
NS
29
158
7,164
9,239
1,980
8,216
2013
4,795
532
2012
669
494
2011
4,737
11,204
15,735
5,283
2010
US
996
3,193
564
4,448
904
170
633
562
36
21,961
Amount raised through IPO exits (US$m)
2013
2014
Israel
In 2014, the US maintained its lead in terms of dollar amount raised via IPO, followed by China. However, Europe recorded the strongest growth in terms IPO proceeds of more
than 600% due to the IPO exit of Rocket Internet AG which raised US$1.8b in the last quarter of 2014. The smaller VC markets also gained momentum during 2014, with Canada
and Israel recording the highest levels of IPO proceeds in the last six years. After a slow activity in the past few years, IPO activity picked up in India during the current year
proceeds grew to US$91m in 2014 from US$11m In 2013 and US$20m recorded in 2012.
Page 15
Global VC-backed M&A

Amount raised through VC-backed M&A exits hits its record high since 2008 in
2014 for US and China, since 2008
Updated
Number of M&A exits
563
552
35
473
427
483
449
409
30
208
193
203
18
15
2008
2009
2010
US
2011
22
19
18
16
17
152
11
23
19
2013
2014
2012
Europe
18
181
156
10
28
23
21
24
224
30
29
17
2
2008
17
13
11
2009
2010
China
2011
Canada
2012
2013
India
2014
Israel
The US and Europe continued to see a higher number of M&A deals in 2014, across VC markets. Compared to 2013, while the number of deals increased by 19% in Europe, the
US saw a marginal increase of 8% during 2014. For other markets, including China, the number of M&A deals either declined or remained at the similar level as seen in the
previous year. For China, despite a 17% decline during current year, M&A deal volume in 2014 was much higher than the yearly totals of 20082012 period.
2010
Canada
India
2012
2013
995
963
579
780
907
827
2011
442
1,561
2,688
2,944
2,337
1,002
255
2009
1,158
1,356
2008
China
683
1,130
1,333
2,309
6,484
10,685
2014
167
2013
2,105
281
41,304
2012
14,029
79,752
2011
Europe
5,975
699
42,358
47,359
869
2010
US
11,317
38,227
8,125
638
21,221
6,350
2009
44
2008
586
25,189
10,674
Amount raised through M&A exits (US$m)
2014
Israel
For the two key VC markets US and China the amount raised through VC-backed M&A exits was at its all-time high in 2014. A strong M&A activity in the US was driven by a
megadeal of WhatsApp Inc., which was acquired by Facebook Inc., with a post M&A valuation of almost US$20.0b, while software sector-based deals drove close a 200%
increase in China in 2014 compared to the previous year. India saw an increase of 28% on the back of increased activity in the consumer services and information
technology sectors.
Page 16
Appendix
Page 17
Sector classification
Sector
Sub-sector
Business support services
Construction and civil engineering

Financial institutions and services
Wholesale trade and shipping
Food and beverage
Consumer goods
Household and office goods

Personal goods
Vehicles and parts
Consumer information services
Consumer services
Media and content

Retailers
Travel and leisure
Non-renewable energy
Renewable energy
Utilities
Biopharmaceuticals
Healthcare
Healthcare services
Medical devices and equipment
Medical software and information services
Aerospace and defense
Agriculture and forestry

Machinery and industrial goods
Materials and chemicals
Communications and networking
Electronics and computer hardware

Semiconductors
Software
Page 18
EYs global venture capital advisory group leadership

network
Global SGM Leader
Maria Pinelli
+44 20 7980 0960
maria.pinelli@ey.com
EMEIA
Demet Ozdemir
+90 212 408 5405
demet.ozdemir@tr.ey.com
Asia-Pacific
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+86 755 2502 8298
ringo.choi@cn.ey.com
Global Leader
Bryan Pearce
+1 617 585 0499
bryan.pearce@ey.com
France and Luxembourg

Franck Sebag
+33 1 46 93 73 76
franck.sebag@fr.ey.com
Greater China
Lawrence Lau
+862 1222 82816
lawrence.lau@cn.ey.com
Israel
Oren Bar-On
+97 2 3568 7102
oren.bar-on@il.ey.com
India
Mayank Rastogi
+91 22 6192 0850
mayank.rastogi@in.ey.com
US Leader
Jeff Grabow
+1 408 947 5607
jeffrey.grabow@ey.com
Operations
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+1 213 977 3253
sandra.feldnervandergriff@ey.com
Page 19
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Venture Capital Insights

Insights development team

Bryan Pearce, Global Leader, Entrepreneur of The YearTM and Global

Venture Capital Insights 4Q14

Section 1: Global VC investment landscape

Venture Capital Insights 4Q14

Section 1: Global VC investment landscape

Global VC investment activity:

Venture Capital Insights 4Q14

Global venture capital investment

Amount invested during Q1 (US$b)

Amount invested during Q2 (US$b)

Amount invested during Q3 (US$b)

Amount invested during Q4 (US$b)

Number of rounds during the year/qtr

Number of rounds during Q4

Amount invested (US$b)

Global VC activity by amount invested and number of rounds

Venture Capital Insights 4Q14

Venture capital investment by geography

VC investment continued to be strong in the US and China during 4Q14 driven by

Amount invested during Q3 (US$b)

Number of rounds during the year/quarter

Number of rounds during Q4

Venture Capital Insights 4Q14

Amount invested (US$b)

Median amount invested (US$m)

Amount invested (US$b)

Amount invested during Q2 (US$b)

Amount invested during Q4 (US$b)

Median amount invested (US$m)

Amount invested during Q1 (US$b)

Median amount invested (US$m)

Amount invested (US$b)

Venture capital investment by geography

Amount invested (US$b)

Venture Capital Insights 4Q14

Median amount invested (US$m)

Number of rounds during Q4

Amount invested during Q3 (US$b)

Number of rounds during the year/quarter

Amount invested during Q2 (US$b)

Amount invested during Q4 (US$b)

Median amount invested (US$m)

Israel (all site)

Amount invested (US$b)

Venture capital investment by hotbed

Top five hotbeds1

Top five hotbeds1

Top five hotbeds1

Top five hotbeds1

Israel (All Site)

Israel (All Site)

Israel (All Site)

Israel (All Site)

Top five hotbeds1

Venture Capital Insights 4Q14

Venture capital investment by industry

Business and financial services