VC first-time infusions hit 15-year low

Posted Jul 21st 2009 2:20PM by Tom Johansmeyer
Filed under: Private Equity

Venture capital funds found 612 companies in which to invest $3.67 billion in Q2. Of this, $1.5 billion (41%) was first-time financing, according to a report by PricewaterhouseCoopers and the National Venture Capital Association. This is only slightly ahead of the action in Q1, in which 141 transactions were first-time, and far behind the pace we enjoyed earlier this decade.

The biotech sector was the big winner in a shrinking market, with funding up 54% to $888 million over 85 deals. The software business was flat quarter-over-quarter at 4644 million over 135 transactions. Investments in internet companies fell 15% to $524 million via 124 deals. Clean technology showed considerable growth, up 15% to $274 million, with 42 transactions closed.

Nonetheless, first-time fundings hit levels not seen since 1994. The biotech category benefits from the availability of exits, having shown several liquidity events this year. The other venture capital sectors haven't been so fortunate.

Most of the money last quarter went to seed or early-stage companies, with 233 receiving capital from the VC world. Late-stage companies lagged, with only 207 being funded. In the middle, 172 companies benefited form VC activity.

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