Software Surge Drives Up U.S. Venture Activity—and Top 10 Deals

7/19/12Follow @bvbigelow

Overall venture capital activity turned up sharply during the three months that ended June 30, with venture firms investing just over $7 billion in 898 deals throughout the United States, according to the latest MoneyTree survey.

The study generally confirms the improving trend in VC activity that was highlighted in the quick take from CB Insights, which we covered earlier this week.

But where CB Insights saw the highest totals in a decade, the MoneyTree Report suggests the engine driving the innovation economy doesn’t have as much horsepower as it has in the past. While software startups attracted more capital than any other sector during the quarter, venture activity in the life sciences sector plunged in both dollars and deals.

The MoneyTree Report, which provides a detailed assessment of quarterly VC activity, is compiled by Pricewaterhouse Coopers and the National Venture Capital Association (NVCA), using data from by Thomson Reuters.

After lagging behind life sciences investments for many years, “It’s exciting to see software take the lead for VC investments in the second quarter,” says Adam Marcus, a partner with Boston-based OpenView Ventures. The $2.3 billion that VCs invested in 290 software deals during the quarter was the biggest amount since the second quarter of 2001, when VC investments in software deals totaled more than $3 billion nationwide. Software deal activity was closer to par—the previous high was 296 deals in the third quarter of 2011.

Internet-specific startups attracted $1.8 billion in 261 deals, marking the second-highest level of Web investments in more than a decade. The top 10 deals for the quarter included two Internet-specific investments (see list below).

Overall, the $7 billion and 898 deals that the MoneyTree report counted in the second quarter represents a 17 percent gain in terms of … 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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