Square, Box, GitHub Dominate Third-Quarter Venture Activity in Bay Area

The whopping $200 million in fourth-round funding collected by San Francisco-based Square in September topped the list of third-quarter venture deals in the region by a wide margin. The only funding events that held a candle to the digital payment company’s huge Starbucks-fueled round were Box’s $125 million round in July, led by private equity firm General Atlantic, and GitHub‘s $99.5 million round, led by Andreessen Horowitz.

That’s according to a report today from the National Venture Capital Association and PricewaterhouseCoopers, using data from Thomson Reuters.

As usual, software and cloud services companies led the list of local companies winning venture backing, although two life sciences companies (MyoKardia and SFJ Pharmaceutical) also appeared in the top ranks.

Overall, venture funding in the region declined slightly compared to second-quarter figures, the NVCA found, as did the overall number of venture deals. Investors put $1.24 billion into 112 startups in the third quarter, compared to $1.29 billion spread across 130 deals in the second quarter.

Here’s a list of the top 15 deals of the quarter in the Bay Area, according to the NVCA/PwC/Thomson Reuters summary. The $125 million won by Palo Alto, CA-based Box showed up in the NVCA’s national data but did not appear on its Bay Area deal list, for reasons that were not immediately apparent.

CompanyAmount, in MillionsTop Disclosed Investors
Square200Citi Ventures, Rizvi Traverse Management
GitHub99.5Andreessen Horowitz, SV Angel
Social Finance77.2Baseline Ventures, DCM
Zendesk45Benchmark Capital, Charles River Ventures, GGV Capital, Goldman Sachs, Index Ventures, Matrix Partners, Redpoint
MyoKardia38Third Rock Ventures
Lumos Labs31.5FirstMark Capital, Harrison Metal Capital, Menlo Ventures,Norwest
Avalanche Technology30Bessemer Venture Partners, Qualcomm Ventures,Sequoia Capital,Thomvest Ventures,VTB Capital,Vulcan Capital
Siluria Technologies29.85Alloy Ventures, Altitude Funds, ARCH Venture Partners,Bright Capital, KPCB, Lux Capital, Presidio STX
ClearSlide28Bessemer Venture Partners, Felicis Ventures, Greylock Partners
Asana27.99Andreessen Horowitz, Founders Fund
GoodData25Andreessen Horowitz, Fidelity Ventures, General Catalyst Partners, Next World Group,Tenaya Capital, Windcrest Partners
Mocana25Intel Capital, Shasta Ventures, Southern Cross Venture Partners, Symantec, Trident Capital
GlassPoint Solar24.85Nth Power
Ticketfly22Cross Creek Capital,Mohr Davidow Ventures,Northgate Capital Group,SAP Ventures
SFJ Pharmaceuticals21Clarus Ventures

While total investment was down, things could certainly be worse. Venture firms put money into Bay Area firms at a rate well ahead of the post-recession lows seen in 2008-2010. In fact, with the exception of Q4 2011 and Q2 2012, companies collected more venture money in the just-completed quarter than in any other quarter since Q3 2000. Nonetheless, investors weren’t able to improve on the momentum that seemed to be building in the second quarter, when funding rebounded dramatically from disappointing Q1 2012 levels of only $850 million.

Investing declines were seen in many regions across the country, and hit the early-stage sector hardest. Nationally, venture firms put $178 million into 67 early-stage deals in the third quarter, a 22 percent decline in dollar terms from second-quarter levels.

“The decline in funding for seed/early stage companies is firmly in place—we’ve seen a drop in dollars and deals both quarter-over-quarter and year-over-year,” said Tracy Lefteroff, global managing partner of PwC’s venture capital practice, in a statement. “We’re seeing fewer new venture funds being raised, which means less capital is available for new investments. And we’re seeing venture capitalists be very cautious with the capital that is available due to the lack of a significant number of liquidity events.”

Wade Roush is the producer and host of the podcast Soonish and a contributing editor at Xconomy. Follow @soonishpodcast

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