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What sectors do expect to raise the most funding in 2014?
Like in the past, we expect internet (broadly-defined) to continue to attract the lion’s share of venture dollars, followed by biotech/medtech. However, within the internet category, we anticipate a shift towards enterprise vs. consumer. In 2011, consumer (Gilt Group, AirBnB, Pinterest) represented over 60% of venture dollars invested; today that ratio has decreased to 30-40% as enterprise companies have come into increasing favor. There is vocal debate as to whether this shift is a positive from an investment perspective (search, for example, the Fred Wilson vs. Dave McClure debate), but it is driven broadly by a few factors: (i) the consumer web continues to mature/growth rates in commerce are slowing down, (ii) later stage investors with large checkbooks are increasingly focused on enterprise, and (iii) there have been notable flare ups in consumer that have given investors pause.
Other interesting trends include a substantial increase in seed level funding (the absolute number of seed deals relative to overall deal volume), the continued rise of New York and Los Angeles as large tech hubs, and a continued rise in valuations across all sectors.
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