NVCA provides key data and, more importantly, the context

Conner Forrest of TechRepublic published an article today, How 2014 could become the year of the startup, making the case that we could see a strong year for startups due to a rise in venture capital investment and exits through mergers and acquisitions and initial public offerings.

Our most recent quarterly PwC/NVCA MoneyTree™ Report based on data provided by Thomson Reuters reported that in the first quarter of 2014, venture capital activity increased from the previous quarter with $9.5 billion invested in 951 deals.

John Taylor, Head of Research for NVCA makes clear to TechRepublic that context is everything. According to Taylor, the increase in venture capital investment from the first quarter of 2014 may portend a strong year, but more importantly, the data show that startups are progressing through a healthy lifecycle.

“What is happening, and the numbers clearly show this when you look at stages, is that the spotlight shifted,” Taylor said. “So, in 2012, 2013 we had a record proportion of the deals being seen in early stage, and now those companies are starting to mature. So, you have more of these companies that have left the early stage category and are now in the expansion stage category. They’re through proof of concept and they just take more capital.”

Increased venture capital activity is also the result of new entrants to venture capital, like corporate-led venture capital investments.

“What we are seeing in parallel with all of this is an increase in corporate venture capital activity,” Taylor said. “Whether it be a smoke stack traditional industry of whether it be one of these tech groups such as Google or Intel. We see their corporate venture groups really ramping up in terms of how early they’re getting into these companies.”

Visit TechRepublic to read the article and stay tuned for the next PwC/NVCA MoneyTree™ Report to be released on July 18, 2014.