New Surveys Suggest Venture Investing Reset at Lower Level in 2009; We Break Out Data for Boston, San Diego, & Seattle

1/22/10Follow @bvbigelow

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the financial collapse. Dow Jones reported that $6.3 billion was invested in 743 venture deals in the fourth quarter, and noted that was up slightly from the $6.1 billion invested in 619 deals in the fourth quarter of 2008. In total, Dow Jones reported that VCs invested $21.4 billion in 2,817 deals in 2009—with dollars invested down by 31 percent from 2008. Dow Jones also noted similar trends within the data. In a statement, Dow Jones Global Research Director Jessica Canning said, “Venture investors gave a much-needed infusion of capital into the IT sector in the fourth quarter, with software and networking leading the rebound.” Canning also noted that VCs shifted away from capital-intensive energy deals.

DowJones4Q09

—The MoneyTree Report by the National Venture Capital Association (NVCA), PricewaterhouseCoopers, and Thomson Reuters said VC investments in the fourth quarter totaled $5.0 billion in 794 deals—a nearly 14 percent decline in dollars and a 13 percent drop in number of deals from the fourth quarter of 2008, when the MoneyTree Report counted $5.8 billion and 910 deals. For the year, the MoneyTree consortium said VCs invested $17.7 billion (down 37 percent from 2008, and the lowest dollar level in 12 years) in 2,795 deals. The report said 2009 represented a 37 percent decrease in dollars and a 30 percent decrease in deal volume from 2008. MoneyTree also noted that cleantech investments declined by 50 percent from 2008, to $1.9 billion invested in 185 deals. The MoneyTree survey reported a decline in Internet-specific companies for the year, but showed Internet-specific investments remained relatively stable during the fourth quarter. The survey counted $908 million in 187 Internet-specific deals during the fourth quarter, compared to $912 million that went into 196 Internet companies during the same quarter last year.

Dow Jones VentureSource also provided breakouts on VC activity in the Xconomy cities of Boston, Seattle, and San Diego. (The MoneyTree report did not provide comparable data.)

—In New England, Dow Jones showed a 23 percent year-over-year increase in VC dollars invested during the fourth quarter, with $955.3 million invested in 108 deals, compared with $776.1 million invested in 85 deals during the same quarter last year. In 2009, total VC dollars invested declined almost 20 percent compared to 2008. The Dow Jones survey said nearly $2.79 billion was invested in 325 companies in 2009, compared with almost $3.47 billion that went into 360 companies in 2008.

—In Washington state, the Dow Jones survey revealed some sharp contrasts, with VC dollars invested leaping almost three-fold in the fourth quarter of 2009, when $239.4 million was invested in 25 companies, compared with the same quarter in 2008, when almost $85.6 million was invested in 18 companies. For 2009, Dow Jones showed a 9 percent year-over-year decline in VC dollars invested, with $793.4 million invested in 107 companies. In 2008, VCs sunk $875.6 million in 97 companies.

—In San Diego, Dow Jones counted fourth-quarter venture investments of $216.9 million in 21 companies, a 16 percent gain over the $186.3 million that was invested in 14 companies during the same quarter in 2008. A total of nearly $948.5 million went into 90 companies in 2009. That compares with $1.18 billion invested in 93 companies during 2008. Dan Kleeburg, an audit partner at Ernst & Young’s San Diego offices, noted that much of that difference was due to one deal in 2008—a $100 million venture investment in Sapphire Energy, the algae biofuel startup. Looking forward, Kleeburg said, “I would say I’m optimistic about 2010. But I don’t think you’re going to see things go back to 2007, or anything like that. On the other hand, I don’t see another dip either, where things just fall off the table.”

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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