|
By Matthew Quinn
Venture capitalists invested $4.8 billion in 637 deals in the third quarter of 2009, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association.
Quarterly investment activity increased 17 percent in terms of dollars, but fell 3 percent in number of deals compared to the second quarter of 2009, the report found using data from Thomson Reuters. PwC and the NVCA expect full-year VC investments to exceed $15 billion.
"The increase in venture capital investing this quarter is very encouraging," noted Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC. "With the signs pointing to an economic recovery, albeit a slow one, we're likely to see the pace of investing continue to strengthen over the next several quarters as long as the IPO markets begin to open up and M&A activity increases."
There have been glimmers of hope in the IPO market, with eight venture-backed companies going public through the first nine months of the year, more than in all of 2008, according to a report from the NVCA release earlier this month.
However, exits via mergers and acquisitions have been harder to come by despite the increase in overall dealmaking. M&A raised $2.25 billion for venture capitalists in the third quarter through the sale of 71 companies, down 56 percent from the same period last year, according to a report released this month by Dow Jones VentureSource.
The increase in dollars invested during the quarter was driven by several large rounds in the clean technology sector, which comprises alternative energy, pollution and recycling, power supplies and conservation. VCs invested $898 million through 57 deals, up 89 percent in terms of dollars and 16 percent in deals.
The biotechnology industry received the highest level of funding for all industries in the quarter with $905 million going into 104 deals, a 4 percent decrease in dollars and a 16 percent increase in deals compared to the second quarter.
While the software industry had the most deals completed with 128 rounds, it fell to third place in terms of dollars invested at $622 million, representing a 9 percent decrease in both dollars and deal volume from the second quarter. The drop in dollars in the third quarter puts software at its lowest level of investment since the third quarter of 1996.
Overall, 10 of the 17 sectors covered in the report experienced investment declines.
Seed and early stage investments continued to grow in the third quarter in terms of number of deals, with $1.6 billion going into 284 rounds. This represents an 11 percent increase in deal volume and a 4 percent decrease in dollars over the second quarter when $1.66 billion went into 255 deals.
Expansion stage dollars increased 27 percent in the third quarter, with $1.6 billion going into 185 deals, while investments in later stage deals increased 35 percent with $1.6 billion going into 168 rounds.
The dollars going to companies receiving venture capital for the first time decreased 20 percent while the number of first-time deals remained flat with $633 million going into 155 deals. That's the lowest dollar level of first-time deals in survey history.
 |
Subscribe to this comment's feed
