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Software Surge Drives Up U.S. Venture Activity—and Top 10 Deals

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dollars, and an 11 percent increase in deal count, compared with MoneyTree’s data from the first quarter of 2012, when $6 billion went into 809 deals. But it amounted to a 12 percent decline in  capital and a 15 percent drop in deals compared with the second quarter of 2011, when VCs invested $8 billion in 1,057 deals.

“I think the larger story is that overall activity is still tracking at a slower pace than last year nationally,” says John Taylor, the NVCA’s vice president of research. With just over $13 billion invested nationwide so far this year, he estimates venture investments will total about $26 billion by the end of the year. That compares to more than $29.5 billion in 2011 and $23.4 billion in 2010.

Taylor says he’s heartened, though, that nearly 53 percent of the deals during the quarter were seed or early stage investments. “That’s the second-highest level since 1995, when the NVCA started collecting the data,” he says.

In the life sciences (biotechnology and medical devices), venture investing declined for the second consecutive quarter, with nearly $1.4 billion invested in a total of 174 startups. It was a nearly 40 percent drop in dollars and a 22 percent slide in deals from the $2.3 billion that VCs invested in 223 deals during the same quarter of 2011. In the biotech sector alone, the MoneyTree Report said $697 million was invested in 90 deals, the lowest quarter total since the first quarter of 2003, when VCs invested $647 million in 68 biotech startups.

“The numbers for the first and second quarters of 2012 are pretty bad,” says Jimmy Rosen of Intersouth Partners, a Durham, N.C. venture firm that invests in mostly seed and early stage startups in the life sciences, including animal health, agricultural, and medical technologies.

Looking just at seed and early stage startups in the life sciences sector, Rosen says the second-quarter results are consistent with the average over the past decade. “The numbers are not as strong as we’d like them to be,” Rosen says, but “as far as trends or outlier data, I certainly would not regard anything that’s happened in the first two quarters of 2012 as an outlier.”

The top 10 deals of the quarter were:

Fisker Automotive, Anaheim, CA; $147.6 million.

Harvest Power, Waltham, MA; $112 million.

Bloom Energy, Sunnyvale, CA, $100 million.

Pinterest, Palo Alto, CA, $100 million.

Castlight Health, San Francisco, CA, $100 million.

Skybox Imaging, Mountain View, $70.2 million.

Qualtrics Labs, Provo, UT, $70 million.

Quora, Palo Alto, CA; $60 million.

SunRun, San Francisco, CA; $60 million.

Palantir Technologies, Palo Alto, CA; $56 million.


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