VC Investment in MA Companies Falls Back to Earth (from $1B to $505M): Top 10 Q3 Deals

Xconomy Boston — 

Here comes another venture capital downturn. Maybe. That’s my not-so-definitive take after looking at the VC investment numbers for Massachusetts in the third quarter of 2011, which broadly reflected the national trend as well.

How any such downturn will compare to 2008-09 is anyone’s guess. Maybe it’s just a blip, or a healthy resetting after a few high-flying months for early-stage companies and their valuations. But maybe the real bloodbath is yet to come.

In any case, venture firms invested a total of $505 million in 95 Bay State companies from July through September, according to the most recent MoneyTree report from PricewaterhouseCoopers and the National Venture Capital Association, with data from Thomson Reuters. That’s down by almost 50 percent from the $1.0 billion invested in 105 deals in the previous quarter (when there was rampant talk of a new tech bubble). But the dollars invested are still 10 percent above the $458 million that VCs put into 92 deals in the third quarter of 2010, according to the report.

We’ll be keeping a close eye on what happens from here. In the meantime, here are the 10 biggest venture deals for Massachusetts companies from the third quarter of 2011, according to MoneyTree (along with links to our prior coverage), below.

The #1 investment was MIT biotech spinoff Verastem; but #10 was an interesting social marketing software company, Awareness, that I hadn’t heard very much about, even though it’s been around since 2000. I’m betting most techies out there haven’t heard of some of the companies from #2-9 either, but the life sciences folks will know them well:

1. Verastem, $32.1M

2. Avedro, $25.5M

3., $25M

4. Fluidnet, $25M

5. T2 Biosystems, $23M

6. Second Rotation (Gazelle), $21.7M

7. Epizyme, $19M

8. Arsenal Medical, $18.3M

9. Proteon Therapeutics, $15.2M

10. Awareness, $13M

And a few other notable investment deals: CloudBees ($10.5M), Foundation Medicine ($10M add-on), and peerTransfer ($7.5M).