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VC investments slide in Q4 and decline for all of 2012

1:16 am by | 0 Comments

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Venture capital deals declined in both the fourth quarter and for all of 2012, according to the new MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers.

In 2012, VCs invested $26.5 billion in startups, down 10 percent compared with $29.4 billion a year ago. The number of investments was 3,698, down 6 percent.

In the fourth quarter, VCs invested $6.4 billion, down from $6.6 billion in the third quarter and $7.4 billion in the fourth quarter a year ago. The average deal size in the fourth quarter was $6.6 million, down from $7.2 million in the third quarter and $7.6 million a year earlier.

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The second half of the year was definitely more pessimistic, particularly after the tepid initial public offering of Facebook. In the second quarter, when confidence was still high, VCs invested $7.3 billion with an average deal size of $7.7 million.

“Most people would say, ‘Oh my gosh, the sky is falling,’ ” said Mark Heesen, president of the NVCA, in an interview with the San Jose Mercury News. Instead, he thinks the pullback will result in “a more disciplined environment. The companies that are going to be funded are going to be really good, and a lot of the ‘duplicative’ companies aren’t going to be funded.”

Investors appear to be concerned about budget battles on the federal level. Certain sectors such as biotech and cleantech suffered. But software companies raised $8.3 billion in 2012, which was more money raised in a single year since the year 2001, according to the report. Cleantech investments fell 28 percent in 2012 compared to 2011. In the fourth quarter, cleantech investments totaled $535 million in 67 deals, down 36 percent in dollars from the third quarter. Life sciences deals fell 15 percent in 2012 to $4.1 billion.

VCs are shifting toward early stage investments. In 2012, they invested in 1,638 early-stage deals, compared to 1,555 a year earlier. The number of expansion deals fell from 1,022 in 2011 to 956 in 2012. And the number of late-stage deals fell from 917 in 2011 to 830 in 2012. But seed investments also declined from 443 in 2011 to 274 in 2012.

Internet investments totaled $1.5 billion in the fourth quarter, compared to $1.7 billion in the third quarter and $1.5 billion a year ago.

The top 10 U.S. venture deals during the fourth quarter were:

Intarcia Therapeutics, Hayward, CA; $155.9 million.

IO Data Centers, Phoenix, AZ; $90 million.

Zulily, Seattle, WA; $85 million.

BrightSource Energy, Oakland, CA; $83.6 million.

Valeritas, Bridgewater, NJ; $75.6 million.

Ultragenyx Pharmaceutical, Novato, CA; $75 million.

Cloudera, Palo Alto, CA; $64.7 million.

23andMe, Mountain View, CA; $58 million.

Calxeda, Austin, TX; $55 million.

Street Response Laboratories, New York, NY; $53 million.
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The top 10 U.S. deals of 2012 were:

SquareTrade, San Francisco: $238 million.

Square, San Francisco; $200 million.

Intarcia Therapeutics, Hayward, CA; $155.9 million.

Fisker Automotive, Anaheim, CA; $147.6 million.

Sapphire Energy, San Diego, CA; $139 million.

Fisker Automotive, Anaheim, CA; $129.7 million.

Box, Los Altos, CA; $125 million.

Drilling Info, Austin, TX; $116.8 million.

Harvest Power, Waltham, MA; $112 million.

Elevance Renewable Sciences, Woodridge, IL; $104 million.


Filed under: Business, Deals, Entrepreneur

This article originally appeared on VentureBeat

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By Takahashi, Dean

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