U.S. venture investors invested $5.6 billion in 761 deals during the period, about the same as the previous quarter and 12% higher than the same period in 2005, according to the MoneyTree Survey by PricewaterhouseCoopers, Thomson Financial (publisher of PE Week) and the National Venture Capital Association.
Not surprisingly, VCs invested most of their money into companies that are developing technology to distribute movies, TV shows and other digital content. In the first quarter, about $396 million went to media and entertainment companies, a nearly 80% increase over the last quarter of 2005, and the largest quarterly infusion of funding for the sector since 2001.
Meanwhile, funding for companies in the life sciences sector – biotech and medical devices – fell 24%, but was still considerd within the typical investment levels for the sector.
Dicing quarterly investment data is no easy task. Imagine a team of researchers collecting information from venture investors on more than 500 deals that were announced during the last three months. It’s no small wonder then that the results of the MoneyTree Survey differ from what Dow Jones VentureOne and Ernst & Young LLP reported last week.
There are some systematic differences between the two studies of U.S. venture investments made during the quarter. The MoneyTree, for example, counts each investment tranche as a separate deal. VentureOne, however waits until all the tranches are completed. This can account for why the MoneyTree reports 761 deals during the first quarter, compared to only 564 for the competing report.
But the difference in dollars raised is harder to explain. The MoneyTree reports venture capitalists forked over $5.6 billion during the first quarter, up 12% from the $5 billion invested during the same period last year. VentureOne says investments jumped 18% to $6 billion during the first quarter of 2006, from $5.1 billion during the first quarter of 2005.