US Venture Capital Deals Increase In Q2

by Philip Morton, Investors Offshore.com

03 August 2009

US venture capital investments reached USD3.7bn in the second quarter of 2009, a 15% increase on the previous quarter, according to the MoneyTree Report produced by PricewaterhouseCoopers and the National Venture Capital Association (NVCA), based on data from Thomson Reuters. A total of about USD15bn is anticipated for the full year, which would be the lowest since 1997 – before the dotcom bubble.

The venture capital industry normally funds 1,000 new companies a year, or as many as 1,300 in recent years, but, according to the NVCA, in the last 12 months a mere 580 deals were completed.

Mark Heesen, president of the NVCA, remarked that until notable upticks in venture capital fundraising and exit activity were seen, considerable increases in the number of deals completed should not be expected. However, the 67% increase in seed and early stage deals must reflect growing interest. Life science companies form the largest sector of financings at USD1.5bn – 41% of the total by volumes raised and 26% by number of deals – a historically high point. Clean tech companies, which comprise alternative energy, pollution control and recycling, power supply and conservation, performed less well; with a 15% volume increase to USD274m, the number of deals remained flat and at only a "fraction" of 2007/08 levels. Heesen claimed that despite this, the sector continued to offer a great deal of promise for future opportunities.

Elsewhere increases were recorded in networking and equipment, computers and peripherals, and IT services, while there were declines in internet specific companies, semi-conductors, media and entertainment, and telecommunications.

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