VC Investing Activity Shows Some Gains in Second Quarter, But Still Well Below 2008 Levels

7/21/09Follow @bvbigelow

Venture capital invested in U.S. startups during the second quarter was roughly half the amount invested during the same quarter last year, but two venture capital surveys found encouraging signs of improvement from the abysmal first three months of 2009.

VCs put $3.67 billion into 612 deals during the three months that ended June 30, according to the MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. That’s down 51 percent from the dollars VCs invested during the same quarter last year, when $7.56 billion went into 1,059 deals nationwide. On the bright side, the capital allocated from April through June represents a 15 percent gain over $3.2 billion invested during the first three months of the year, which hit the lowest level since the first quarter of 1997, according to the MoneyTree Report.

It’s also a less impressive rebound than was suggested in the early read on VC data we got last week from ChubbyBrain.

Q2 VC activity

Q2 VC activity

Dow Jones VentureSource highlighted a similar trend in the VC data it released over the weekend, which shows $5.27 billion was invested in 595 deals during the second quarter. While that’s still dramatically lower than the $8.3 billion that Dow Jones counted in 726 deals during the same quarter last year, it marks a 32 percent improvement over Dow Jones’ numbers for the first quarter. The trends spotlighted by the two reports are often comparable, but Dow Jones and MoneyTree use different methods, sources, and criteria to generate their respective data.

Beyond the broad trends, there are interesting details in both reports. For example:

—VCs invested a total of $1.5 billion in 160 life sciences companies during the second quarter—marking a 47 percent rebound over the prior quarter, according to the MoneyTree Report. “This is the most amount of money we’ve ever seen going into this sector, and considering the environment out there, that is quite a statement,” says Tracy Lefteroff, global managing partner of PricewaterhouseCoopers’ venture capital practice. Dow Jones VentureSource highlights a similar … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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