<article>Whichever way you look at it, 2015 was a record-setting year for venture capital.</article>

Whichever way you look at it, 2015 was a record-setting year for venture capital.
Investors put in over $128 billion of funding worldwide in 7,872 deals, in sectors that ranged from healthcare to fintech, and retail to education. That&#8217;s 44 per cent higher than 2014&#8217;s total of $89.4 billion, according to the <a style="color: #000080;" href="https://www.cbinsights.com/research-venture-capital-2015" target="_blank">2015 Venture Pulse Report</a> by CB Insights and KPMG.
Startups built businesses based on technology that could affect the way every sector works. Their potential is not restricted to a particular geography, and investors could see that. Their investments made 71 VC-backed companies into unicorns — private companies with $1 billion valuation — in 2015, compared with 53 in 2014.
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The first two quarters of the year were packed with deals. The numbers started tapering off in the third quarter, and reached 1,742 deals in Q4, the lowest since the first quarter of 2013.
2015 was also the age of unicorns, with 72 private companies attaining the status. However, only 12 of them graduated to that level in the last quarter, compared with double that figure in the third quarter of 2014.
In the US, number of deals fell for their second straight quarter in Q4, to their lowest total since the fourth quarter of 2011. Funding reached a whopping $72.4 billion in 2015, out of which $13.8 billion came in the fourth quarter.
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Mega rounds, where companies raised more than $100 million, was a trend this year. There were over 100 such deals in the US, which raised a total of $27.3 billion. By the fourth quarter, such deals started to decline, as investors were getting concerned about the slowdown in China, uncertainty in the global economy and interest rate hike in the United States.
Asia was hit hard, after startups in India and China had raised massive funding rounds in the first half of the year. Funding to VC-backed startups was $9.7 billion in Q4, a fall of 42 per cent compared with the previous quarter. However, by that time, Asian startups had raised record funding of $39.7 billion, more than the previous four years combined. Worries about China&#8217;s economy and a weakening retail sector persist in 2016.
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In India, the surge of funding and easy money raised fears of an over-valuation from prominent investors such as Nikesh Arora of Japan&#8217;s Softbank, that put in $2 billion in the country. Such concerns hit deals and funding, which fell 46 per cent and 18 per cent respectively in Q4, versus the previous quarter. But, it was still a record year for India, where VC-backed startups raised $1.5 billion in 114 deals.
Over-valuation was evident among startups that went for IPOs. During the fourth quarter, several IPOs fell short of their recent private valuations. That&#8217;s bad news for VCs, who depend on such offerings for profitable exits. Some investors moved to recalibrate their investments, including write-downs in their major investments to reflect fair market value. There were some notable exits for VCs worldwide, including in payments company Square, all-flash enterprise storage company Pure Storage, online classifieds service Avito and oncology company Novocure.
Corporates ramped up their participation, and invested in about 25 per cent of deals for three straight quarters, either directly or through their venture investment arms. They were more active in Asia though, participating in over one-third of all deals.
Seed funding fell in the US, which would worry founders aiming to raise their first funding rounds. Despite more VCs and multi-stage funds investing at the seed stage, the total value of investments fell for the second straight quarter, at 24 per cent deal share.
The pullback in investments seen in the fourth quarter might carry over to 2016 as well, as investors focus on company fundamentals. During the first three quarters of 2015, investors funded startups regardless of whether they had positive or negative cash flows. That is unlikely to be repeated this year, and investors will look for efficiency in operations, positive cash flows and realistic burn rates. Slowdown in the world economy might lead to more consolidation through mergers and acquisitions, with an overall decline in venture capital deals.
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Whichever way you look at it, 2015 was a record-setting year for venture capital. Investors put in over $128b of funding worldwide in 7,872 deals

After touching all-time high by mid-2015, global VC funding tapered off in Q4

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After touching all-time high by mid-2015, global VC funding tapered off in Q4

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