U.S. Venture Investment Hits Highest Level Since 2008
July 20, 2010 2 Comments
Venture capitalists invested $7.7 billion into U.S.-based companies during the second quarter, total of 744 deals, the highest quarterly total since the third quarter of 2008, according to new statistics released by Dow Jones VentureSource.
The quarter’s 744 VC deals was a 13% increase from the prior year, while the capital invested rose 26%.
The second quarter’s deal count represents a 13% increase from the 656 deals closed during the same period last year, and capital raised is up 26% from the $6.1 billion invested in the year-ago period.
IT Sees Highest Deal Count, But Healthcare Garners More Dollars
Information Technology (IT) and Healthcare continued to be the strongest industries for deals closed and dollars invested though no clear leader emerged as IT garnered the largest proportion of deals but Healthcare claimed more dollars.
Healthcare companies raised $2.7 billion for 201 deals, a 13% increase in capital raised from the $2.4 billion put into 189 deals during the second quarter of 2009. Within Healthcare, the Biopharmaceuticals sector continued to see the highest level of activity. Ninety-five Biopharmaceuticals deals raised $1.2 billion, a 30% increase in deals but slight drop in capital raised from the same period last year.
In IT, 231 deals raised $1.9 billion, up from the second quarter of 2009, which saw 208 deals raise $1.6 billion. Software garnered the largest slice of capital as 156 deals raised $908 million, up from the 132 deals that raised $761 million in the second quarter of last year.
Energy and Services Industries See Growth
The Energy & Utilities industry garnered $1.1 billion for 26 deals during the second quarter. Deals were on par with the year-ago period, but capital raised jumped 86% thanks to a few large, later-stage deals. The Energy & Utilities industry claimed the nation’s largest deal in the second quarter — a $350 million round raised by Better Place, a Palo Alto, Calif.-based company that provides support infrastructure for electric vehicles.
The Business and Consumer Services industries also saw growth. In Business and Financial Services, 117 deals raised $814 million, up from 96 deals that raised $707 million in the year-ago period. In Consumer Services, 120 deals raised $847 million, up from 89 deals that garnered $644 million during the second quarter of 2009.
Investment in the Web-heavy Consumer Information Services sector, part of the Consumer Services industry, rose 45% as 92 deals raised $710 million. This sector also bucked the trend toward later-stage deals as 57% of Consumer Information Services deals were for seed- and early-stage rounds, making Consumer Services the only industry group with over half of investments going to early-stage deals.
Later-Stage Deals Pick Up, Claim More Capital
Later-stage deals accounted for 44% of the second quarter’s deals and 62% of total capital raised. This is up from the 39% of deals and 56% of capital that later-stage deals claimed in the same period last year. Seed- and first-rounds accounted for 32% of deals and claimed 15% of capital raised during the most recent quarter, down from the same period last year when early-stage rounds accounted for 35% of deal activity and 19% of capital raised.
The median deal size for the second quarter of 2010 was $4.9 million, down slightly from the $5 million seen in the same period last year.