Tech Startup Investing, Following the Seasonal Pattern, Falls to $250M in July

8/17/11Follow @xconomy

Startups in the Bay State have taken a bit of a break from the feverish pace they were inking deals at earlier this summer. Last month, 34 startups pulled in $250.5 million in equity-based deals, down from the whopping $564.7 million they raised across 38 financings in June, according to data from Funding Flash, a daily roundup of companies receiving venture capital, angel investment, and growth equity funding, provided by our data partner CB Insights.

It’s not too much of a drag, though. Tech startups this July raised almost twice as much this year as they did last July, when they nabbed $131 million through 26 deals. That month last year was also a big drop from June, when they raised $307 million. So it seems we’re following a pattern here.

The biggest startup investment this July—$33 million for Cambridge, MA-based obesity drug developer Zafgen—was just one-fifth of the size of June’s winning $165 million investment for Boston-based CSN Stores. There was also another $5.4 million raised in debt- or options-based deals this July.

Without the big Internet financings last month, healthcare was the winning sector for dollars raised, pulling in $134 million through 17 deals. Other than Zafgen, quite a few deals were small. Five of the healthcare investments rang in at less than $1 million each in July.

The Internet sector nabbed second place for dollars raised, at $60.8 million in seven financings. The winner for that sector was Boston-based Gazelle, which provides a site for recycling old electronics and raised $22 million in Series D financing.

Non-Internet and mobile software companies collectively pulled in the third highest total for funding in July, at $14.5 million across two deals. That’s actually an improvement over the money the sector raised in June ($13 million), and a big jump in its standing as a sector for the month (up from seventh in June). Energy came in fourth place as a sector in July with $13.1 million and two deals. The remaining sectors: mobile and telecommunications, electronics, industrial, and computer hardware and services, each pulled in $10 million or less.

Read below for the details on the top 10 deals of the month.

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