Internet venture funding hits a post-2000 record last year

Written By Unknown on Jumat, 16 Januari 2015 | 16.00

U.S. venture funding for Internet startups last year rose to its highest level since 2000, as even controversial companies like Uber Technologies attracted big bets on the future.

Internet companies raised US$11.9 billion in 2014, up 68 percent from 2013, according to the MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. That was the most money raised since 2000, the peak year of the first Internet boom, when $41.7 billion poured into online startups, the report said.

The software industry also reached a post-2000 high in 2014, bringing in $19.8 billion, the MoneyTree report said. Software was the biggest industry for all venture investment and saw a 77 percent gain in dollars raised in 2014.

Despite warnings by some venture capitalists that tech investing may be getting overheated, the bets have continued to grow and there have been some lucrative payoffs. In the fourth quarter of last year, the median amount raised in a funding round in the IT sector was $5.89 million, the highest quarterly sum in the last five years, according to a report by Dow Jones VentureSource.

Many startups raised far more. The biggest venture-capital funding round of the quarter raised $1.2 billion for Uber, the disruptive ride-hailing service that has continued to grow in the face of legal challenges in many cities and controversies about its corporate culture. That round closed on Dec. 4, shortly after reports that an Uber executive had proposed digging up personal information on journalists that criticized the company.

The second-biggest round in any industry went to Magic Leap, an augmented reality company that hasn't even said exactly what it's working on but raised $542 million from Google, Qualcomm Ventures, movie studio Legendary Pictures and other investors. Magic Leap is developing what it calls a Dynamic Digitized Lightfield Signal, which apparently will "generate images indistinguishable from real objects" and make them visible in the air.

Snapchat, the sharing app for disappearing photos and videos that reportedly turned down a $3 billion takeover bid from Facebook in late 2013, took in almost $486 million from Yahoo and others in the third-biggest round of the quarter.

The fourth quarter also brought evidence that venture investments can still pay off. Mergers and acquisitions raised $32 billion in the quarter, up 60 percent from the previous quarter, according to Dow Jones VentureSource. The elephant in the room was Facebook's $19 billion acquisition of mobile messaging service WhatsApp, which was announced earlier in the year but closed in the fourth quarter.

The biggest IPOs of venture-backed companies also had a tech flavor, with LendingClub leading the pack by raising $870 million. It's an online marketplace that connects borrowers and lenders. Online home furnishings store Wayfair was the second-biggest IPO of the quarter, raising $319 million.


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