What tech bubble ? VC funding shrinks in Q3

Money On Hook

In the second quarter, venture capital spending hit highs not seen since the early 2000s, but the trend didn't exactly continue into the third quarter.

VC funding dropped 29 percent to $9.79 billion, and deals decreased 10 percent from the previous quarter, according a report from CB Insights published Tuesday.

Considering that during the second quarter VC funding hit $13.9 billion, a quarterly high not seen since the Q1 of 2001, the drop was significant.

The number of U.S. VC-backed IPOs also cooled off during the quarter. Eighteen VC-backed companies went public compared with 24 in Q2 and 35 in Q1. And only one of the 18 VC-backed IPOs was a tech company. Alibaba's massive IPO may have contributed to the decrease of companies going public.

Also, while deal volume was down and VC funding had a sharp decline, there are still signs of continuing froth.

For example, it's still easier for a tech company to raise funding at a $1 billion valuation than to go public at the same price.

This year 21 tech companies have raised a first round of financing at $1 billion compared with just seven tech firms that have gone public at the same valuation or more, according to CB Insights.

JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News