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2015 Set Venture Capital Records. Don't Expect the Good Times to Last.

The bubble isn't popping. Think of it as deflating.

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Earlier this month, Re/code published an early snapshot of the Venture Pulse report put out by the research firm CB Insights. The data from that preview showed a steep dropoff in venture dealmaking in the fourth quarter of 2015 (as did another report from PricewaterhouseCoopers).

Today, CB Insights is publishing the full Q4 Venture Pulse report. Here’s the story it tells about 2015: In the beginning, venture capitalists invested a lot of money and produced a lot of unicorns; then, things began to slow down quickly in the second half of the year. For 2016, don’t expect a bull market to rear its head.
Here are some basic facts and figures:

  • Over the course of 2015, $128 billion in venture capital was invested globally, an increase of 44 percent from 2014.
  • Between the third and fourth quarters, investment fell from $38.7 billion to $27.2 billion as dealmaking dropped to its lowest levels since the first quarter of 2013.
  • In 2015, venture-backed companies in North America raised almost $75 billion. Between the third and fourth quarters, VC investment raised fell from over $20 billion to $14.1 billion.
  • Seed-stage funding as a percentage of all investment fell to 25 percent, its lowest share in five quarters. Series A deals rose to become 27 percent of all venture dealmaking activity.
  • Corporations are increasingly investing through venture capital arms, now participating in 25 percent of all deals.
  • The slowdown in venture investing is hitting India especially hard: VC funding fell 18 percent between Q3 and Q4, and total dealmaking fell 46 percent over the same period. Chinese VC funding dropped almost 30 percent as well.

The falloff in financing isn’t just limited to the private market. CB Insights predicts that the trend of companies going public below their private valuations, as Square did, will continue into 2016. Still, more businesses may go public, “and M&A activities may rebound” as cash-strapped companies look to public investors and giants like Google and Apple to start acquiring firms at bear market prices.

For those of you who prefer graphics, charts and other post-text elements, here are a few from CB Insights’s report. You can read the whole thing on their website.

CB Insights
CB Insights
CB Insights
CB Insights

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