Venture capital investing reaches 15 year-high, software firms rejoice

Now is a great time to look for venture capital funding, with funding this quarter the highest its been since 2000. The numbers from MoneyTree Report, compiled by PricewaterhouseCoopers and the National Venture Capital Association using data from Reuters, shows that investment in the software sector is shooting up in 2015.

Over 1,000 deals have been made during the quarter, with 26 per cent increase in investment amount, totalling $13.4 billion (£9 billion) across the entire industry. The software sector has shot up from 21 per cent of the total investment in the first quarter of 2006, to 42 per cent in the first quarter of 2015.

Most of that has to do with larger startups like Snapchat, Uber, Airbnb, Dropbox and Spotify, all still receive venture capital to continue expansion and acquire talent. Some of these startups have valuations higher than many of the companies on The New York Stock Exchange, with values ranging between $10 to $40 billion (£6.70 to £26.80 billion).

Biotechnology is the second largest area of investment, with $1.7 billion (£1.14 billion) spent on 124 deals during the quarter. Some other sectors like shopping, food and environment aren’t looking so hot, although solar energy startups are receiving a lot of attention.

Several technology companies looking for venture capital do not even need the money right away, but are looking to store up cash for large acquisitions, or to fend off from major attempts to acquire talent. Increases in wages, land values (in California) and potential programs or talent all need money, and having a lot of that stored up is a good thing.

Uber, for example, has received $2.6 billion (£1.74 billion) in investment this year and $3 billion (£2 billion) invested last year. It has a valuation of $45 billion (£30 billion), higher than Tesla Motors, Netflix or Yahoo. Investors are expecting an IPO from the taxi service either this year or early next year.