Detroit Venture Investments Down, U.S. Investments Up in Second Quarter

Xconomy Detroit/Ann Arbor — 

According to a new report from the analysts at CB Insights, VCs invested $8.1 billion in more than 800 deals in the second quarter of 2012, the highest total since the dot-com era. The findings were generally confirmed by the latest MoneyTree survey, which reported that venture firms invested just over $7 billion in 898 deals across the nation. Both reports attributed the uptick to a surge in software startups.

The MoneyTree data revealed that the second-quarter picture in Detroit looked a little different than the national trends. After the best first quarter since 2000—five deals worth a total of $15.1 million—venture activity slowed to just one deal, a $200,000 investment by Arboretum Ventures in Southfield, MI-based Molecular Systems Corporation. That’s a decrease from the second quarter of 2011, when two deals worth $2.2 million were reported, and a significant drop from the second quarter of 2010, when four deals worth $34.9 million were logged.

Though the Q2 deal involved a biotech company, Michigan’s sluggish venture climate could be feeling the effects of a national downturn in life sciences investing—a sector where Southeast Michigan has traditionally been strong. Though the software and mobile startup scene here is growing, particularly in Detroit, it may take a while until we catch up with the rest of the country. Stay tuned.

The MoneyTree Report is compiled by Pricewaterhouse Coopers and the National Venture Capital Association (NVCA), using data from by Thomson Reuters.