venture capital report

Rod Werner
Senior Vice President
Managing Director
City National Technology Group
(650-812-8311
Rod.Werner@cnb.com

Some venture capital industry highlights from the second quarter:

●  New York may still be the nation's money center, but new ideas melding finance and technology – "fintech" – are sprouting in many places well beyond the Big Apple. In the second quarter, financial-related companies made the top-10 venture capital deal lists in Silicon Valley, Boston, Los Angeles and Orange County, according to data firm CB Insights. "Fintech continues to be a hot investing trend with VCs today," said Rod Werner, head of City National's Technology Group in Palo Alto.

The biggest fintech deal was a $275 million Series B funding of San Francisco-based Affirm, a startup online lender that bills itself as "the future of honest finance." In Boston, Circle Internet Financial raised $50 million in Series C money. The company focuses in part on new apps aimed at making online and in-person payments easier and more secure – including using bitcoin, the digital currency.

Meanwhile, AssetAvenue in Los Angeles got an $11 million Series A infusion. The firm is a new online lender focused on commercial real estate.

●  A new wave of startups are betting they can do a far better job handling companies' human resource functions than what most firms now are used to. That promise brought $500 million in Series C venture funds to San Francisco-based Zenefits last quarter. The firm already has 10,000 small and midsized companies using its cloud software to manage services including payroll, health insurance and other benefits.

In New York, another "all-in-one" online human resources platform, Namely, raised $45 million in Series C financing. And in Orange County, Connectifier was founded to focus on one specific slice of human resources: helping company recruiters find the best job candidates by delivering a "complete view" of prospective employees. The Costa Mesa firm got $6 million in Series A funding last quarter.

●  VC firms raised $10.3 billion in cash commitments from investor clients in the second quarter, the most since the fourth quarter of 2007 – just before the financial system crisis hit. While that may fuel concerns of a peak in VC activity this time around, Bobby Franklin, CEO of the National Venture Capital Association, says new funding is playing catch-up.

"What this all means is that fundraising is finally scaling up to the level of venture investment we’ve witnessed over the past few years, and the institutional investors are recognizing the great opportunities to invest in the next generation of American companies," Franklin said.

●  Biotech and life-sciences companies continue to lead the ranks of VC-backed companies going public. In the second quarter, 27 VC-financed firms made their initial public stock offerings. Of those, 19 were biotech companies, according to Thomson Reuters and the National Venture Capital Association. The biggest VC-backed IPO, however, was from San Francisco fitness tech company Fitbit. Its June IPO raised $841 million in all.

 

The content of Venture Capital Report is compiled from data and sources believed to be reliable, but is not guaranteed as to accuracy or completeness. Opinions expressed are those of the authors or the interviewees and are not necessarily the opinions of City National Bank, member FDIC. This publication is intended to be a source of general information regarding subject matters of interest to our clients. The effectiveness of the advice or suggestions presented, if any, will depend on the reader’s situation and are for the reader to determine. If investments are discussed, the discussion should not be considered or relied upon as specific investment advice directed to the reader’s specific investment objectives, nor should any discussion of specific securities be taken as a solicitation or recommendation for any reader to buy or sell such securities. City National Bank (and its clients or associated persons) may at times have positions in securities and investments discussed from time to time in this publication and may make additional purchases or sales inconsistent with the discussion. City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. Rules and regulations in the areas of law, tax and accounting are subject to change and open to varying interpretations. The reader is encouraged to consult his or her own tax, accounting or legal adviser.