By Donald Zuhn --
Last month, the National Venture Capital Association (NVCA), a trade association representing the U.S. venture capital industry, released the results of its MoneyTree Report on venture funding for the second quarter of 2011. The NVCA quarterly study, which the group conducts with PriceWaterhouseCoopers using data from Thomson Reuters, indicates that venture capitalists invested $7.5 billion in 966 deals during the second quarter, which constituted a 19% increase in both dollars and deals as compared with the first quarter of 2011 when $6.3 billion was invested in 814 deals (upon further review, the NVCA noted that its first quarter numbers were also better than previously indicated, rising from the $5.9 billion and 736 deals originally reported in last quarter's report). The NVCA noted that the second quarter investment numbers were higher than they had been since the second quarter of 2008. The group also noted that while the number of deals in the first half of 2011 was nearly the same as the number of deals in the first half of 2010 (1,780 versus 1,784), the dollars invested in the first half of 2011 was up $1.5 billion as compared with the first half of 2010 ($13.8 billion versus $12.3 billion).
In the Life Sciences sector (biotechnology and medical devices), $2.1 billion was invested in 206 deals, which constituted a 37% increase in dollars and a 12% increase in deals from the first quarter. The biotech industry alone received $1.2 billion via 116 deals, which marked a 46% increase in dollars and a 20% increase in deals as compared to the first quarter of 2011. In terms of dollars invested, the biotechnology industry placed second (to the software industry) among the industries tracked by the NVCA (up from last quarter's third place finish). The medical device industry finished in third place in the second quarter, collecting $841 million in 90 deals. Of the seventeen sectors analyzed for the report, the NVCA noted that ten experienced double-digit increases in dollars invested in the second quarter.
Tracy Lefteroff, the global managing partner of the venture capital practice at PriceWaterhouseCoopers US noted that "the increase in investment levels in Q2 remains encouraging for entrepreneurs," adding that "[a]t the current pace of venture capital investing, 2011 is on track to exceed $26 billion, which would put it as the sixth most active year in VC investing history." NVCA president Mark Heesen, however, pointed out that "[f]or the past three years, the venture capital industry has been investing significantly more dollars into companies than it has been raising from institutional investors." He predicted that "[t]his level of investment cannot continue if we do not start to see a pick-up in exits and, subsequently, fundraising," noting that "[t]he money simply will not be available to invest."
For additional information regarding this and other related topics, please see:
• "VentureSource Reports 35% Increase in 1Q Venture Funding," April 26, 2011
• "NVCA Reports Modest Gains in First Quarter Venture Funding," April 19, 2011
• "NVCA Reports 31% Drop in Venture Funding for Third Quarter," October 17, 2010
• "NVCA Reports 34% Increase in Venture Funding for Second Quarter," July 22, 2010
• "NVCA Report Shows First Quarter Drop in Venture Funding," April 20, 2010
• "Biotech/Pharma Financing Improving, R&D Spending Up," August 31, 2009
• "NVCA Study Shows Increase in Third Quarter Venture Funding," October 23, 2009
• "First Quarter Venture Capital Funding at 12-Year Low," April 23, 2009
• "NVCA Study Shows Decline in 2008 Investment; BIO Study Predicts Biotech Rebound in 2009," February 16, 2009
• "NVCA Predicts Another Slow Year for Venture-backed Businesses in 2009," December 18, 2008