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Tech

Big startups get a flood of funds in Q2

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Opening sequence

Tech

Big startups get a flood of funds in Q2

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COMING UP:Big startups get a flood of funds in Q2

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00:00:00
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00:00:02
It's feast or famine for startups in Silicon Valley. In the second-quarter, investors plowed over $15 billion into venture-capital-backed startups, and that outpaces all but three-quarters since the 2000 Dot-com boom. Reuters Heather Somerville.>> Going into the fourth-quarter last year all the way up to the beginning of this year, there was a noticeable slow down in venture investing.
00:00:26
That was widely expected to continue and perhaps even worsen. But what we saw was a rebound of 20%.>> But not all startups are equal. Even as total funding was up sharply, the number of deals was down by about 5% from the first-quarter. Investors are being selective, after a rash of startups that had received huge funding rounds over the last year, failed to reach growth targets or proved to be unsustainable businesses.
00:00:55
Mutual funds and sovereign wealth funds still driving the big deals. Uber got $3.5 billion from the Saudi Arabia's public investment fund, making it the biggest steal of the quarter and Snapchat got 1.3 billion from investors including Fidelity.>> Another reason is improvements in the stock market have help investors get their confidence back.
00:01:17
Valuations are coming down, so more deals are to be had, so investors are getting really active trying to scoop up companies that have lower devaluations by 30 or 50%.>> So what are those with money look for? Software is what they seem to be chasing. Over half of the second-quarter investments were in software startups, up 70% from the first-quarter.