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Dec 10
2010

Where are VC dollars going?

Posted by dbedell in venture capitalTechnologyFinanceCash

dbedell

Venture capital investment may be declining, but not for start-ups. Early stage financings continue to hold the imagination of VC investors, according to a new report out by PricewaterhouseCoopers (PWC) and the National Venture Capital Association (NVCA).

The report provides an update on venture capital investing in the third quarter of the year, and put investment activity at $4.8 billion in VC dollars spent on 780 deals over the quarter. This is a pretty significant decline from the previous quarter, which saw $6.9 billion spent on 962 deals.

More mature sectors, however, continue to glean start-up dollars, while younger, more volatile sectors have seen a decline in investment dollars. Notes Mark Heesen, president of the NVCA: “While the burgeoning clean technology industry will experience significant investment volatility as the sector matures, the established software and life sciences sectors continue to benefit from a steady commitment of venture capital dollars being put to work within meaningful pockets of innovation.”

According to the report, late-stage funding rounds were conspicuously declining and investors were focusing more on first-time investments than later-stage financing. In fact, 271 of the 780 deals done in the quarter were first round financings, and close to $1.3 billion—or more than a quarter—of invested cash went to early-stage deals.

Venture capitalists are banking on software and biotech developments—and looking to get in on early stages of development. Particularly of interest are IT innovations within the cloud computing, social media and security space, and biotech and medical device developments on the medical side.

 

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