Venture Surveys Show Nationwide Increase, More or Less, in Second-Quarter Investments

7/19/10Follow @bvbigelow

How would you prefer your venture capital survey data this morning? Depending on the source, we can serve it up lukewarm, hot, or scalding. All three measures show that venture funding rose during the second quarter; it’s just a matter of degree:

CB Insights, a startup financial services firm based in New York, reports that $5.9 billion in venture capital was invested in 612 startups nationwide during the second quarter, which ended June 30. That was flat compared with the $5.9 billion in venture funding that CB Insights counted during the previous quarter, and 11 percent higher than the $5.3 billion invested during the second quarter of 2009. In its commentary, CB Insights says the overall trend—along with a “tepid” climate for VC fund-raising—”gives credence to the idea that venture funding may be settling into a ‘new normal.’ ” The firm suggests that annual venture investing has been reset at a range between $20 billion to $25 billion a year.

Dow Jones VentureSource, which reported its data over the weekend, found that venture investors put $7.7 billion into 744 deals during the same period—a searing 65 percent increase over the $4.7 billion in venture funding that Dow Jones counted in the previous quarter, and a 26 percent gain over the $6.1 billion recorded for the same quarter last year. In contrast to CB Insights, Dow Jones VentureSource asserts that deal activity and capital invested in venture-backed companies is almost back to the pre-recession levels of 2008.

The MoneyTree Report landed somewhere in the middle, saying $6.5 billion was invested in 906 deals—a deal count significantly higher than the other two—and a 33 percent increase over the $4.9 billion invested in 740 deals during the previous quarter. The $6.5 billion also was more than 50 percent higher than the $4.3 billion that VCs put into 705 deals during the second quarter of 2009. “Venture capitalists are feeling more positive about the economic outlook for investment, based upon the jump we saw in VC funding this quarter,” says Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers, which prepares the quarterly MoneyTree survey with the National Venture Capital Association, based on data from Thomson Reuters.

As I’ve noted before, each survey uses a different methodology and taps into different networks that collect information about each … 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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