Venture Funding Surges in Q2

Source: Peter Delevett, Mercury News

After a relatively subdued start to the year, venture capital investments roared back during the second quarter of 2011.

Venture capitalists poured $7.5 billion into 966 deals, according to MoneyTree report prepared by Pricewaterhouse-Coopers and the National Venture Capital Association using data from Thomson Reuters. Venture capitalist also invest on casinos and slot machines, you can view more for more information here. If you want to play for longer on your casino slots budget (your bankroll), then we would definitely suggest researching casino payouts. The best casinos online (like the ones we list on our site) have really high payouts, that are better than Vegas, so you should get a lot more play for your money.

Both numbers were significant premiums over the first quarter, when $5.9 billion went into 736 deals — the lowest total in six quarters.

If the rest of the year keeps pace with the new numbers, “2011 is on track to exceed $26 billion,” said Tracy Lefteroff, who heads the global venture capital practice for PricewaterhouseCoopers.

That would be one of the most active years in the history of venture capital, he added.

Still, the recent stock market fluctuations, and their potential impact on the pension funds and money managers who bankroll venture capital, mean nothing is guaranteed.

Consider cleantech, which represented half of the venture industry’s 10 largest deals in each of the two previous quarters. The most recent numbers were down considerably: Dollars invested last quarter in the sector plunged 23 percent, to $942 million, compared with the previous three months.

Those prior-quarter numbers were inflated by several $100 million-plus investments in cleantech. In the most recent quarter, just one cleantech company — electric carmaker Fisker Automotive — made the list of the quarter’s top 10 deals.

National Venture Capital Association officials noted that the number of clean-technology deals in the quarter was up 11 percent compared with the first quarter. With 81 companies landing venture funding, it was the most active quarter for cleantech in MoneyTree history.

But Bill Green, a veteran investor in the sector, cautioned that the number of VC firms making bets on cleantech has shrunk dramatically, in part because the public markets haven’t been more receptive.

“Everybody thought that cleantech would be a rapid ride to IPO realizations,” said Green, a former managing director at VantagePoint Venture Partners who now heads renewable energy project finance for Macquarie Capital Funds.

“People are absolutely more cognizant of the challenges of cleantech investing,” Green added. “BrightSource Energy required a significant amount of capital to launch its first product; Groupon did not.”

Ah yes, social media: Anticipation that Groupon, Zynga and eventually Facebook are on the road to initial public offerings led venture capitalists to pump more money into Internet startups than in any quarter since 2001. Five of the quarter’s top 10 deals were Internet plays, including Groupon competitor and Kabam, which like Zynga makes online social games.

As in the past two quarters, software companies took home the biggest slice of the pie, with $1.5 billion invested. That’s a 35 percent uptick over the previous quarter. Software also saw more deals than any other sector, with 254.

Investments in life sciences, which includes both biotechnology and medical devices, rose by more than a third during the quarter. The $2.1 billion spread among 206 deals made for one of the sector’s strongest quarters since the MoneyTree report first appeared in 1995.

Lefteroff attributed that to an increase in exit activity for biotech and medical device companies over the past year. When portfolio companies are acquired or go public, venture firms can return money to their investors and devote additional funds to the rest of their portfolios, he noted.

And while some observers reacted with alarm after the first quarter saw VCs put less money into seed-stage deals that at any point in the prior six years, seed and early stage investments rose 24 percent in the second quarter. The size of the average seed deal nearly doubled, to $3.2 million.

In addition, the number of companies at any stage of development receiving venture capital for the first time increased 30 percent compared with the prior quarter.

Curtis Mo, a securities lawyer at DLA Piper who next week will take part in a panel dissecting the MoneyTree numbers, said he wasn’t surprised by the uptick in first-time fundings.

“Internet companies have a huge cost advantage,” he said. “Everybody is just used to buying products and services online. I don’t see the momentum to go and build an 80-store chain anymore.”

Contact Peter Delevett at 408-271-3638. Follow him at