Second-Quarter VC Activity: Wish They All Could Be California Deals

Xconomy National — 

Venture capital activity that surged during the first three months of 2011 continued to rise through the second quarter, as funding for Internet startups soared by 69 percent over the same quarter last year, according to CB Insights, a New York information and data services firm.

In its quarterly venture capital activity report, CB Insights says U.S. venture firms invested $7.6 billion in 768 startups throughout the country during the second quarter ending June 30. It was a nine-quarter high point for both dollars and deals, and represented a 54 percent increase (from $5.9 billion) in capital, and a 25 percent gain in deals (from 612), compared with the same quarter in 2010. VC activity during the quarter even showed a slight increase over the first quarter of 2011, which recalled a pre-recessionary era as VCs pumped $7.5 billion into 738 startups nationwide.

If the current pace of venture funding continues, the U.S. could reach between $29 billion and $30 billion in total capital invested this year. “Of course, some of the punditry have suggested that the VC asset class’ ‘right size’ is around $25 billion,” the report says, “so it will be interesting to see if the momentum of Q1 and Q2 continues or if we’re in for a second half swoon.”

I’m expecting to get a more-detailed regional breakdown on venture activity next week, when the rival MoneyTree and Dow Jones VentureSource surveys will help triangulate VC trends. In the meantime, here are some highlights of the nationwide data being released today by CB Insights:

—Internet startups represented the busiest sector of venture activity during the second quarter, with VCs investing $2.74 billion (or 36 percent of all dollars) in 298 startups (39 percent of all deals). The capital flowing to Internet deals marked a 69 percent jump over … Next Page »

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