Posts Tagged ‘MoneyTree report’

Article from PE Hub.

Venture dollars have shifted to early rounds from late-stage deals over the past several years. It is a shift that proved fastest in quick changing industry segments, such as the consumer Internet, and slowest in segments like semiconductor, which are less dynamic.

Until now, I have not seen a study with an industry-by-industry breakdown of the trend. The work came from Preqin and offers some useful detail. For instance, just 13% of “consumer discretionary” deals over the last four years were late stage transactions and just 15% of Internet fundings, the study found.

Meanwhile, 45% of semiconductor and electronics deals in the four years from 2009 to 2012 were late stage. And a third of transactions in cleantech and health care were, according to the study.

Since the Great Recession of 2008 and 2009, venture capitalists have shifted substantial dollars to the early stage. In 2007, 40% of invested capital went to late stage deals. Nineteen percent found its way to the early stage, according data from the MoneyTree Report. By 2011, early stage spending was 30% of the total and late stage had fallen to just under 34%. The breakdown for the first half of 2012 is almost identical to last year.

According to Preqin, another segment with strong early stage interest is business services, where just 17% of deals were late stage. Preqin draws the dividing line between early and late at the Series C funding, lumping expansion financing into its later stage tally.

Among the latest of the late fundings during the period were the G and H rounds. Several took place. In 2010, Onconova Therapeutics raised a $15 million Series H and the same year saw Zipcar put another $21 million in its war chest with a Series G financing from Meritech Capital Partners and Pinnacle Ventures.

SolarCity this year roped in $81 million in a Series G round with investors including Silver Lake and Valor Equity Partners.
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Sure the economy is coming back from the slump, but this article from InternetNews brings some hard reality checks.

“Total venture capital spending increased 17 percent in the third quarter to more than $4.8 billion, but investments in privately held software companies fell to its lowest level since 1996.

Thanks mainly to its relatively low initial startup costs and its home run potential in the equities market, the software sector for years has either ranked first or second in total VC spending.

But it fell to No. 3 among investment sectors last quarter, according to the latest MoneyTree Report from PricewaterhouseCoopers LLP and the National Venture Capital Association.”

Biotech firms, which checked in with the most total dollars garnered in the quarter at $905 million, closed 104 deals in the quarter. In the second quarter, biotech upstarts received a total of $947 million—a 4 percent decrease—but the total number of financing rounds closed surged up 16 percent from 90 deals.

Clean technology, which includes companies focused on alternative energy, pollution, recycling and power supplies and conservation was next with $898 million in VC investments, up an impressive 89 percent from the prior quarter.

Software firms did close the most deals in the quarter (128 rounds) but fell to third place in overall investments at $622 million, down 9 percent in both dollars and deal volume from the $680 million and 141 deals closed in the second quarter.

“The third quarter illustrates a gradual and deliberate industry shift towards a longer term venture capital investment strategy,” said Mark Heesen, president of the National Venture Capital Association. “Venture capitalists are becoming increasingly focused on industry sectors which require multiple rounds of financing for an extended time horizon.”

Software’s loss was a boon for the biotech, medical devices and clean technology sectors.”

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Venture capital investment was down slightly in the third quarter, according to the MoneyTree Report released Saturday from PricewaterhouseCoopers and the National Venture Capital Association. Venture capitalists put $7.7 billion into 1,033 deals, a decrease of 7 percent from the second quarter.

The third quarter of the year is generally slower for venture investing, and the analysts who produced the report said that the economic crisis is not yet affecting venture numbers. In future quarters, though, the industry will probably see a dip in investing, said Tracy T. Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers.

For now, “the venture industry is very much open for business,” said John S. Taylor, vice president of research at the National Venture Capital Association.

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“Venture investment fell 8.5 percent during the first three months of 2008 compared to the final quarter of 2007, according to the new MoneyTree Report from PricewaterhouseCoopers and the National Venture Capital Association.”

To read more on the MoneyTree report, go to VentureBeat´s excellent article here.

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