NEW YORK – Venture capitalists put $4.7 billion to work in 597 deals during the first quarter of 2010, up 12 percent from the $4.2 billion invested in 522 deals during the same period in 2009, according to industry tracker Dow Jones VentureSource.
In Rhode Island, there were two deals with a total value of $9.07 million in the first quarter, compared with no deals in the same period a year ago, VentureSource said.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
“The uptick in venture investments during the first quarter of 2010 shows the industry is moving toward a slow recovery following the economic downturn,” said Jessica Canning, global research director for Dow Jones VentureSource. “As the liquidity and fundraising environments thaw, investors have more capital on hand but continue to deploy it cautiously.”
According to VentureSource, the information technology industry claimed the largest proportion of deals and dollars during the first quarter, raising $1.5 billion for 192 deals, or 32 percent of the deal flow in the period.
In IT, the most recent quarter’s totals were up 15 percent from the $1.3 billion invested in 190 deals during the same period last year. Software continued to claim the largest slice of IT investment, raising $822 million for 122 deals, up 13 percent from the first quarter of 2009. Deal activity in the electronics and computer hardware sector picked up as investors put $257 million into 36 deals, an 82 percent increase from the $141 million put into 17 deals during the same period last year.
Health care companies raised $1.2 billion for 141 deals, a 20 percent drop from the $1.5 billion put into 130 deals during the first quarter of 2009. Within health care, 59 biopharmaceuticals deals raised $619 million, down 20 percent from the same period last year, while 62 medical device deals raised $439 million, a 23 percent drop in capital raised despite an increase in deals from 47 in the first quarter of last year.
VentureSource said energy and utilities companies garnered $351 million for 27 deals, up 69 percent from the same period last year. All but two of the deals completed in this sector went to renewable energy companies.
Both services industries also saw a jump in capital raised. The business and financial services industry saw 99 deals raise $808 million, a 33 percent increase over the first quarter of last year. Investment in the consumer services industry rose 20 percent to $430 million for 88 deals.
Thanks to larger rounds raised by consumer goods companies, investment in that industry spiked 75 percent. In the first quarter, 14 consumer goods deals raised $288 million.
The median deal size for the first quarter of 2010 was $4.5 million, down slightly from the $5 million seen in the same period last year, according to VentureSource.
Later-stage deals accounted for 38 percent of the first quarter’s deals, which was on par with the first quarter of 2009, but claimed a larger proportion of capital. In the most recent quarter, later-stage deals garnered 59 percent of capital invested, up from 55 percent. Seed- and first-rounds accounted for 35 percent of deals and claimed 17 percent of capital raised during the most recent quarter, a change from the same period last year when early-stage rounds accounted for 33 percent of deal activity and 19 percent of capital raised.
“After a prolonged slow period for the liquidity markets, there is a backlog of later-stage companies looking to exit,” said Canning. “Until investors can find a viable exit opportunity, they will focus their capital on keeping these companies alive.”
