In the second quarter, equity investments in venture-backed companies in the US fell for the fifth quarter running to $8.2 billion compared to $10.4 billion in the first quarter, according to the PricewaterhouseCoopers MoneyTree Survey.
This represents a decline of 21%, albeit significantly less than the 41% fall in the first quarter, suggesting that investment levels may be settling. In the second quarter, 669 companies received funding, down from 752 in the first quarter, a decrease of 11%.
Seed and series A commitments declined further from last quarter’s record low, attracting only 15% of investment. Series B rounds of funding also dropped, but later stage companies saw funding increase by 8% from $2.6 billion to $2.8 billion. While more of these companies received funding, later-stage financings were more modest than in the past with average deal size falling from $18 million in first quarter 2000 to $12.6 million this quarter.
In the life sciences and healthcare segments, deal flow was up with the amount invested growing 6% to $1.3 billion. Much of the momentum is attributed to the biopharmaceuticals segment which attracted $502 million of investment.
Unsurprisingly, Internet investments continued their downward spiral with funding dropping 28% to $5.7 billion – the lowest in two years. All Internet sub-sectors were down. Most notable was Internet infrastructure that fell 45% to $1.3 billion, while Internet-related software investments put in the best performance, falling only 8% to $1.7 billion.