Venture capital deals are so outsize in popular imagination, it's hard to remember that this kind of private financing actually follows public markets. Not the other way around.
And 2013 was no exception. Like the stock market, venture money flooded into high tech--in particular early stage software and Web firms, according to the latest PriceWaterhouseCoopers Money Tree report, released Friday.
"Advances in technology continue to revolutionize how companies engage their customers on nearly every level and has changed the landscape of virtually every industry," Mark McCaffrey, global software leader and technology partner at PWC said in a press release.
For the full year 2013, venture capital firms invested $29.4 billion in 3,995 deals, a 7 percent increase by dollars and 4 percent increase by number of deals over 2012. Nearly 40 percent of those dollars went to software companies.
More specifically, Internet companies received more than $7 billion, the highest level of investment since 2001. Software companies pulled in $11 billion with 1,523 deals, the highest level since 2000.
Early stage companies saw a 17 percent increase to $9.8 billion and a 15 percent increase in the number of deals to 2,003. The average early stage deal was $4.9 million, about flat from a year earlier.
First-time financings also increased, by 14 percent for dollars and 3 percent for number of deals, with $5 billion going to 1,314 companies.
The picture wasn't entirely rosy, however.
In the fourth quarter of 2013, first-time financings decreased 4 percent to 345 compared to the prior quarter. The report did not indicate why that was, but the fourth quarter was dominated by the government shut-down and skirmishes over increasing the national debt, both of which rippled out into the larger economy.
Industries that got the highest dollar volume of first-time financings were biotechnology, software, media and entertainment. Industries that got the highest number of initial funding were IT services, media and entertainment, and software.
Nearly sixty percent of first-time deals went to finance early-stage development.
PWC used data from Thomson Reuters for the report.