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Midwest Tech Report 2015


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This in-depth report analyzes the funding activity to the Midwest tech industry including overall financing activity, top investors, which cities and states saw the most funding, and more.

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Midwest Tech Report 2015

  2. ABOUT CB INSIGHTS Backed by the National Science Foundation and RSTP, CB Insights uses data science and machine learning to help our customers predict what’s next—their next customer, their next investment, the next market they should attack, or the next company they should acquire. CB Insights tracks over 250,000 companies using machine learning and technology to monitor 150,000 sources in real time. We also leverage exclusive data partnerships to uncover unique insights and cover every financing worldwide. To see how our data can make your life easier, visit:
  3. TABLE OF CONTENTS 3 US And Midwest Financing History 4 Most Active Investors 16 Notable Companies 19 Cities And States Breakdown 25
  5. 5 US TECH HITS $47B IN FUNDING IN 2014 Since 2010, annual deals and dollars in the US saw healthy growth through the first half of 2015. Deal activity increased 121% from 2010 to 2014, and funding rose 201% in the same period. The first half of 2015 has already surpassed deal and funding activity in 2010, with over $31B in funding deployed across more than 3,000 deals.
  6. 6 FUNDING TO MIDWEST TECH ECOSYSTEM REACHES $4.4B IN 2014 Annual funding rose steadily from 2010 through the first half of 2015. Funding increased 67% in 2014 compared to 2010 figures, and 27% over 2014. 2015 is showing no signs of a slowdown, dollars invested are projected to reach almost $5.3B by year-end, at the current run rate. Deal activity is trending toward flat or a slight decrease in 2015.
  7. 7 LAST 5 QUARTERS SAW MORE THAN $1B DEPLOYED TO MIDWEST TECH COMPANIES As seen below, deals and dollars invested in the Midwest are trending upwards since Q1’10. Over the last 5 quarters Midwest tech companies have seen over 200 deals per quarter. In 2010, they saw an average of 94 deals per quarter.
  8. 8 INTERNET TOPS, BUT MOBILE & TELECOMMUNICATION GAIN NATIONWIDE Unsurprisingly, the internet sector commanded the most dollars deployed to any sector at 59% halfway through 2015. Mobile and telecommunication saw healthy growth in investment rising from a 15% share of dollars in 2010, to 20% in 2013, and 27% halfway through 2015. Software deals grew to 12% in 2014, but significantly dropped in 2015’s first half, standing at 6%. Share of dollars deployed to computer hardware and electronics has slowly declined since 2010.
  9. 9 INTERNET AND MOBILE ACCOUNT FOR 82% OF DEALS NATIONWIDE IN FIRST HALF OF 2015 The internet and mobile sectors consistently rank one and two respectively for share of US deals since 2010. Software deals rose from 7% deal share in 2012, to 9% in 2014, and 11% halfway through 2015. Computer hardware & services and electronics have ranged between 3% and 6% of deals in the period covered.
  10. 10 INTERNET SECTOR STAYS HOT, COMPUTER HARDWARE HEATS UP IN MIDWEST Internet companies commanded 59% of capital deployed in the first half of 2015. Computer hardware & services attracted 21% of dollars, and mobile & telecommunications saw a decline in investment, falling from 28% in 2012, to 17% 2014, and stood at 10% in 2015’s first half.
  11. 11 INTERNET AND MOBILE DOMINATE MIDWEST DEAL SHARE In each year since 2010, internet deal share has stood at 55%+ and was at 58% in the first half of 2015. Deal share to the mobile sector hit a five year high in 2014 at 23%. Put another way, over 1 out of every 5 deals completed in 2014 went to mobile startups. Finally, software and electronic deals stayed consistent in the first half of 2015.
  12. 12 FUNDING SHARE TO LATE-STAGE DEALS FALLS IN 2015 Late-stage funding rounds (Series D+) received 30% of Midwest dollar share in 2014, but saw a big decline in the first half of 2015, only commanding 15% of dollar share. Late-stage financings in 2014 included AvantCredit ($225M), SolidFire ($82M), BigCommerce ($50M), and Craftsy ($50M).
  13. 13 EARLY-STAGE DEALS DROP BELOW 50% In each of the past five years, early-stage deal share (Seed/Series A) hit 50%+, reaching as high as 59% in 2012. However, the first half of 2015 saw early-stage deal share fall below the 50% mark — at 49%.
  15. TOP 20 MOST ACTIVE MIDWEST VC INVESTORS Despite announcing in February that their 10th fund will be their last, Austin Ventures was the most active VC in the Midwest, though their investments were primarily in Texas. Foundry Group placed 2nd in the top 20 list and notched a big exit in June’s IPO of FitBit, which Foundry invested at the Series B. See the chart below for a list of the most active VCs in the Midwest. 15
  16. INTEL CAPITAL LEADS MOST ACTIVE CORPORATE VC INVESTORS Below is a breakdown of notable corporate VCs active in the region, including Google and Salesforce’s venture arms. 16
  18. 18 Company Total Funding WELL-FUNDED COMPANIES IN THE MIDWEST $330M $166M Select Investors RRE Ventures, August Capital, DFJ Growth, Tiger Global Management Foundation Capital, Intel Capital, Tenaya Capital, Crosslink Capital RRE Ventures, Siemens Venture Capital, General Electric New Enterprise Associates, Samsung Ventures, Valhalla Partners $158.1M $150M $141M Kleiner Perkins Caufield & Byers, Camden Partners Description Online consumer lending platform Human resources software Energy management software Data Storage Healthcare Solutions
  19. @cbinsights COMPANY MOSAIC Assessing the health of opaque private companies using public data. What the National Science Foundation backed us to create to help you see what’s next. What is Company Mosaic? Quantitative framework to algorithmically measure the overall health and growth potential of private companies. Companies scored on a 0 to 1000 scale. It tracks 3 “M”s for each company based on non- traditional signals such as: • Momentum – Uses signals ranging from hiring growth, exec turnover, news volume and sentiment, customer & partner signings, product development velocity, web traffic, mobile app data, and social media chatter • Market – Uses Market Mosaic to assess health of industry the company competes in • Money – Financial strength and viability of company based on burn rate, financing history and investor quality
  20. 20 Company Mosaic Score NOTABLE EARLY-STAGE COMPANIES IN THE MIDWEST RANKED BY MOSAIC SCORE 846 819 Select Investors Silverton Partners, S3 Ventures, Tim Draper Greycroft Partners, Chicago Ventures Chicago Ventures, Hyde Park Venture Partners, Pritzker Group Venture Capital Correlation Ventures, Greycroft Partners 816 813 Description Mobile delivery application Online retailer of arts and crafts Business software review platform Same day delivery for businesses 808 Pinterest marketing and analytics tools SeedStep Angels, i2E *Note: CB Insights’ Company Mosaic score uses public data and predictive algorithms to assess the strength of private companies.
  21. 21 Company Mosaic Score NOTABLE EARLY-STAGE COMPANIES IN THE MIDWEST RANKED BY MOSAIC SCORE 808 785 Select Investors Battery Ventures General Catalyst Partners Greycroft Partners, Highland Capital Partners 785 779 Description IT Infrastructure Service Data analytics tools Employee scheduling software Content and data solutions 784 Digital tools for students Great Oaks Venture Capital *Note: CB Insights’ Company Mosaic score uses public data and predictive algorithms to assess the strength of private companies.
  23. TOP STATES RANKED BY DEALS AND DOLLARS Texas and Colorado saw the largest amount of deals completed since 2010 with over 1,200 and 750, respectively. Illinois saw over $5B invested across 700 deals since 2010. The table below lists other states in the Midwest region and how they rank in deals and dollars terms. 23
  24. TOP 10 CITIES RANKED BY DEALS AND DOLLARS Austin, Chicago, and Boulder lead the pack in the number of deals and dollars since 2010. The table lists other top Midwest cities for deals and dollars. 24
  25. 25 TEXAS: DEALS AND DOLLARS TREND Texas has led the Midwest in deals and dollars since Q1’14. Austin is the hub, but cities such as Houston and Dallas have also seen significant investment, accounting for roughly 20% of Texas deals. See the chart below to learn more.
  26. 26 ILLINOIS: DEALS AND DOLLARS TREND Chicago received 83% of dollars deployed in Illinois since Q1’14. Other cities like Champaign have received significant investment as well. Below is a chart showing Illinois’ financing activity since Q1’14.
  27. 27 COLORADO: DEALS AND DOLLARS TREND Boulder and Denver commanded 67% of deal activity in Colorado since Q1’14. Lesser known cities such as Englewood received 7% of deals completed in the Rocky Mountain State. The chart below illustrates deals and dollars invested in Colorado since Q1’14, including notable deals and top cities.
  28. 28 MISSOURI: DEALS AND DOLLARS TREND St. Louis commanded 56% of deal activity in Missouri since Q1’14. Cities like Kansas City and Maryland Heights accounted for 17% of deals completed. Below is a chart showing Missouri’s financing activity since Q1’14.
  29. 29 KANSAS: DEALS AND DOLLARS TREND Shawnee Mission commanded 65% of deals in Kansas since Q1’14. 19% of deals completed went to Wichita and Kansas city. Below is a chart illustrating deals and dollars invested in Kansas since Q1’14. $0.22
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