2012 VC Funding Strong in Software, Soft Elsewhere: The Top 10 Deals

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the quarter, in contrast to most other sectors. Software also was the largest sector for venture investments in 2012, with $8.3 billion in 1,266 deals for the year. The total marked a 10 percent increase in capital deployed and an 8 percent increase in the number of deals over 2011, Lefteroff said. It also was the highest level of VC funding in software since 2001.

Biotechnology was the second largest category for venture investments in 2012, with $4.1 billion going into 466 deals. While the deal count was roughly the same in 2011, Lefteroff said the amount of capital invested in biotech startups in 2012 had declined 15 percent. VC investments in medical devices totaled $2.4 billion in 313 deals in 2012, representing a 13 percent drop in dollars and a 15 percent decline in the number of deals from the previous year. Much of the decline in both categories occurred in first-time financings, which saw the lowest number of deals since 1995, Lefteroff said.

In the cleantech sector, the MoneyTree Report counted $3.3 billion invested in 267 deals in 2012. It was a 28 percent decrease from the $4.6 billion and a 23 percent drop from the 348 cleantech deals in 2011.

Last year also marked the fifth straight year of the VC paradox, with venture firms investing more capital in 2012 than they raised. “Based on what venture capital firms have raised over the past few years, it’s likely that we’re going to see fewer and fewer dollars invested in coming years,” said Mark Heesen, president of the NVCA.

Heesen also noted that VC investments in early stage deals were down sharply—a collapse that CB Insights highlighted earlier this week. But Heesen said there’s a lot more seed stage activity going on than the numbers show. Heesen said venture firms often withhold … Next Page »

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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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