In this article we will take an analytical approach and perform straight analytics on a huge dataset available from https://www.pwcmoneytree.com/. PWC Money tree provides a data dump of all the Venture capital investments from 1995 onwards. Having data that goes far into the history should give us enough to extract the necessary analytical juice out of it.
The year 2000 was definitely the peak for VC investment craziness. A whopping 105 Billions was pumped into startups and bringing them quickly for IPO. Ever since after the crash of 2000, the investment has never reached even half the mark of year 2000. Again, look at the big jump between 1999 and 2000, a real indicator of investment frenzy!
Let us dig deeper and see which industries were favoured by the VCs
We can see that Software industry was the largest receiver of VC investment back in 2000 and it has been gaining attention since 2009 as indicated by the widening mouth.
Let us get more specific and see how has the investment pattern changed between the peak of 2000 and the current time 2014
Notice the high flying targets of 2000 namely Telecommunications and Networking receive almost zero attention in todays time. Back in 2000, all the wireless companies, networking companies were investing heavily to build today’s network. The software industry is producing and benefiting more and is reaping the investments that were made during the early 2000 period.
Now compare the bars for the “Biotechnology” industry, it is the only industry where investment has reached the 2000 levels.
Times have changed and so has the investment favourites in 2014
Finally let us compare the number of deals happening between today and 2000
During the peak of 2000, as high as 8000 deals were registered and comparing that to 2014, it stands at half value of roughly 4000 deals.
So looking at just investment amount and the number of deals between 2000 and today, clearly we are not close to investment bubble. We may be heading into it or some mini bubbles but one thing that we need to remember and thank is all the effort and investment that was put out during those early years that has made everything tech so pervasive [from always online smart phones to cheap networking and hardware resources]
Here is a quick tool to compare the VC investment favourites by each year