Surveys Agree on Rising Tide of VC Activity, But Differ on the Ebb and Flow

4/19/10Follow @bvbigelow

After running the early returns on first-quarter venture activity, we got some additional perspective from other sources over the weekend that show an ebb of VC investments in life sciences startups and a surge in energy deals. All three VC surveys—from Dow Jones, MoneyTree, and CB Insights—showed an overall rising tide compared with the first quarter of 2009, both in terms of venture dollars invested and in the number of deals nationwide. But judging the strength of the comeback is tricky, due to differences in the way each survey collects its data as well as the way each one defines venture deals.

Dow Jones VentureSource showed the most conservative increase, with $4.7 billion invested in 597 companies, representing a 12 percent rise in dollars invested and a 14 percent increase in deals over the dollars and deals that VentureSource counted a year ago.

The MoneyTree Report, which found that venture capitalists invested $4.7 billion in 681 deals, showed a 38 percent gain in dollars invested and a 7 percent rise in deal count compared to its own data from the first quarter of 2009. (The MoneyTree Report is prepared by PricewaterhouseCoopers and the National Venture Capital Association, or NVCA, based on data from Thomson Reuters.)

As we reported last week, CB Insights pegged VC investments at $5.9 billion across a total of 731 deals nationwide. That represented a 51 percent gain in both dollars and deals over the same quarter of 2009 , compared with data from the New York data services firm, which was known previously as ChubbyBrain.

How is it, you may ask, that Dow Jones VentureSource counted 597 deals during the quarter, while CB Insights counted 731? Good question. Each survey claims it has the best methodology. CB says it only counts investments by VC firms; it does not count contingent funding, so-called “venture loans,” or strategic corporate funding through R&D partnerships. Dow Jones says it only counts equity financings by VC firms, corporations, diversified private equity firms, and individuals into companies that have received at least one round of venture funding. In looking at the deal lists for Seattle and San Diego, though, we noticed that the list of specific deals from Dow Jones was not as complete as the … 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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