New Surveys Suggest Venture Investing Reset at Lower Level in 2009; We Break Out Data for Boston, San Diego, & Seattle
The picture of venture capital investments in U.S. startups filled in a bit this week, with the results of two more VC surveys aligning generally with the findings we reported earlier this month from ChubbyBrain, the New York data services company that tracks the innovation economy. New surveys from Dow Jones VentureSource and the MoneyTree Report indicate overall venture investing has reset—after falling by roughly a third since 2008—with VC activity strengthening toward the end of 2009.
The differences are in the details, and one of the benefits of multiple data sources is a clearer perspective on what the differences really mean. Dow Jones VentureSource says the definition it uses for a venture capital deal “is the clearest and best tested in the industry.” Dow Jones includes equity financings and cash investments by professional venture capital firms, corporations, diversified private equity firms, and individuals into companies that have received at least one round of venture funding. ChubbyBrain says it only counts investments by venture capital firms, including corporate venture groups. It does not count angel investments (unless the angels invest with VCs or corporate venture funds), and it does not count contingent funding, strategic corporate funding through R&D partnerships, so-called “venture loans,” or incubator investments.
Differences in the way each survey defines venture investments can translate into differences in the way data gets counted, which sometimes results in disparate and even contrary findings. What follows is a breakout of the highlights from three nationwide VC surveys (as well as regional data and trends for New England, Washington state, and San Diego) for 2009 and the fourth quarter that ended in December:
—ChubbyBrain noted a dip in VC dollars invested nationwide during the fourth quarter compared with the same period in 2008, with venture investments in cleantech and energy companies showing substantial drops while VC funding for early stage companies—especially Internet startups—increased sharply. ChubbyBrain said nationwide VC investments during the three months that ended in December totaled $5.5 billion in 687 deals (a year-over-year decline of 7 percent). For 2009, which seems to rank as the year VCs would prefer to forget, ChubbyBrain said VCs invested $20.8 billion in 2,461 companies.