MoneyTree Report: Seattle Venture Dollars Hit 7-Year Low Last Year

The amount of venture financing poured into Seattle-area companies didn’t keep pace with strong growth nationally last year—in fact, it was quite the opposite.

That’s according to the latest MoneyTree Report, from the National Venture Capital Association and PricewaterhouseCoopers, which shows venture investment in Seattle region dropping to $508 million in 2011. That’s the lowest figure notched in the report’s tracking since 2003, when venture deals reached $359 million, according to data provided by Thomson Reuters.

There’s a pretty clear link between those two periods, of course: In 2011, just as in 2003, the economy at large was still trying to recover from a recent financial meltdown. The average dollar amount of venture deals tracked by the MoneyTree Report was basically identical in both of those years, at just over $4.8 million per financing deal.

(MoneyTree provided Xconomy with data focused on the Seattle area, including the Eastside, to help us track this figure. Venture deals across the entire state were higher, at around $541 million.)

The Seattle area’s dropoff came as national VC investing was on the upswing, increasing by 22 percent over 2010’s figure to post the third-largest investment total in the past decade.

Mark Heesen, president of the NVCA, noted that the number of deals nationally didn’t keep up with the growth in dollars last year, reflecting larger fundraising rounds across most sectors.

“For some, the higher rounds are driven by the challenging exit market which requires venture capitalists to fuel their existing portfolios longer and at greater investment levels than in the past,” Heesen said. “This is particularly acute in the life sciences and clean tech sectors. In other sectors such as Internet, software and media, the higher rounds speak to increasing valuations.”

The number of venture deals in and around Seattle held steady in 2011 at 105, in line with the figures seen in 2009 and 2010.

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