Q3 Venture Investing Waxed in Software, Internet, IT—Waned in Life Sciences

10/21/11Follow @bvbigelow

The numbers rarely agree, but a third set of venture investment data for the third quarter also shows a nationwide decline in life sciences funding, a trend that’s also apparent in venture data for the San Diego area.

The latest venture survey, from Dow Jones VentureSource, shows VCs putting $8.37 billion into 765 deals in all kinds of emerging businesses throughout the United States during the three months that ended Sept. 30. That was a 29 percent increase in venture investments during the same quarter in 2010 (when VentureSource counted $6.48 billion) and an 8 percent rise in the number of deals (from 709).

The year-over-year trend of increased nationwide venture funding that VentureSource charted also was apparent earlier this week in the MoneyTree Report and in the results that CB Insights released last week. All three surveys also showed a general, year-over-year contraction in venture capital going to healthcare and life sciences deals—particularly in biotech—while financing for software, IT, and Internet deals generally increased.

The similarities mostly end there, and it becomes a matter of choosing which survey you prefer—or maybe which one you want to believe in. The most important discrepancy to me was that VentureSource and CB Insights showed strengthening VC activity through the third quarter, and at a pace that hasn’t been seen for years. In contrast, the MoneyTree Report shows a significant slowdown during the same period.

In the greater San Diego area, the VentureSource survey found that VCs invested $205.7 million in 19 deals during the third quarter. That was a 10 percent decline in dollars (from $229.7 million) and a 13 percent decline in deals (from 22) during the same quarter last year.

Still, it was a strong quarter for venture investments in technology, according to VentureSource, with funding for biotech, medical devices, and healthcare deals getting … 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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