Triangulating VC Activity: Third Survey Shows Q1 Increase in Invested Capital

Xconomy National — 

Another survey on venture capital activity during the first quarter shows that venture investors put $6.4 billion into 661 startups nationwide. That’s a 35 percent increase in capital and a 5 percent rise in deals, according to the report from Dow Jones VentureSource.

It’s the third survey to show a substantial increase in the amount of money invested during the first quarter, while the number of deals stayed relatively constant or declined.

Big investments in capital-intensive industries, such as renewable energy, healthcare, and information technology, accounted for much of the increase, according to Jessica Canning, global research director for Dow Jones VentureSource. The Dow Jones data also showed:

—Capital invested in venture-backed healthcare companies increased by 21 percent compared to the same quarter last year, but the deal count declined by 6 percent, with $1.6 billion going into 148 deals. As usual, most of that went to venture-backed biopharmaceuticals, which raised $849 million for 61 deals, a 15 percent rise in capital invested and a 13 percent decline in deals.

—Information technology companies raised $1.6 billion for 212 deals nationwide. That was a 16 percent increase in capital invested capital and a 10 percent gain in deals compared to the same quarter last year. Software companies closed 152 deals for $741 million, a 24 percent increase in deals and a 10 increase in capital invested.

—The energy and utilities industry raised $742 million for 33 deals, almost double the capital raised during the same period last year. Six renewable energy companies raised rounds of $50 million or larger, and two of those represented rounds of at least $100 million.

—Seed-stage and Series A rounds accounted for 38 percent of the deals and 16 percent of the capital that was invested during the first quarter. Later-stage deals accounted for 40 percent of the quarter’s deals and 64 percent of total capital raised in the first quarter.

The numbers from Dow Jones follow the MoneyTree Report, which found that VCs invested $5.9 billion in 736 deals during the first three months of 2011. When compared to the same quarter in 2010, the MoneyTree Report showed a 13.7 percent increase in capital and a 6.4 decline in the number of deals.

We also reported data from CB Insights, a New York financial data provider, which said venture investments amounted to $7.5 billion during the first quarter (a 27 percent increase over the first quarter of 2010). CB Insights counted 738 deals throughout the country during the first quarter, which was not a significant change over the deal count in the same quarter of 2010.