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MoneyTree Report Sees Third-Quarter Slowdown in U.S. Venture Investments

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the underlying volatility and conservatism that has been seen for the last 18 to 24 months.”

Lefteroff attributed the slowdown in life sciences to the “continuing difficulty that life sciences companies were having in dealing with the FDA in getting transparent pathways to getting their products approved.” Kjellson agreed, saying, “The FDA has been the target for a great deal of lobbying by the NVCA, industry groups, and VC groups. But we’re beginning to see all that activism now turn into action with some exciting proposed legislation introduced very recently to help reform the FDA.”

As for the surge in IT-related venture funding, Kjellson pointed to the macro trends in that sector. “There’s just enormous disruption in IT due to two major platform changes in social media and mobile.” And in enterprise software, Kjellson quoted InterWest partner Bruce Cleveland as saying, “We spent the last 25 years selling technology inside the enterprise, and we’re going to spend the next 10 years getting that technology out of the enterprise and into the cloud or hosted and SaaS [software as a service] space.”

In the cleantech sector, Stephan Dolezalek of VantagePoint Capital Partners says it appears the United States has been holding back its venture investments in renewable energy and other sustainable technologies. He attributed that to three broader economic factors: The closing of the IPO window “and a concern that window might not reopen before the 2012 election;” a significant drop in solar panel prices due chiefly to the Chinese government’s “strong level of support” for its solar and wind companies; and the “chilling effect” of the political battle surrounding the collapse of Solyndra, the Fremont, CA-based solar company.

“It’s put enough fog on the road that investors in cleantech have largely slowed down to see what’s going to happen next,” Dolezalek said.

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