Venture capitalists pulled back sharply on investments during the second quarter, reflecting a wait-and-see attitude for all but the most promising companies.
VCs put $2.69 billion into 309 companies during the second quarter, according to preliminary, unaudited data from Thomson Reuters (publisher of PE Week). That’s down significantly from the $7.57 billion investors put into 1,042 companies during the same period in 2008. The official MoneyTree report from the National Venture Capital Association and PricewaterhouseCoopers, based on Thomson Reuters data, is expected to come out later this month.
Biotechnology and health care investments buoyed the investment totals in Q2, accounting for nearly 45% of the dollars put to work during the three-month period.
Four of the 10 largest deals done the quarter were health care deals. Investors put $145 million into anti-cancer company
The two biggest deals were both non-standard VC investments. The $145 million that Clovis raised from
Small Bone Innovations went far afield to raise its $108 million. It raised $25 million from
Although VCs put fewer dollars to work overall, each company that got money collected more than it might have a year before. The average investment round size was $8.5 million during the second quarter, up from $7.2 million during the same period a year ago.
Cleantech investments fell significantly during the second quarter. VCs put $237.8 million into 21 companies, according to the preliminary data. That’s down from $898 million VCs put into 67 cleantech companies during the same period last year.
Thomson Reuters’ preliminary data runs counter to a report late last month from accounting firm Deloitte and the consultancy Cleantech Group, which reported that investments in cleantech reached $1.2 billion in 94 cleantech companies during the second quarter, a 12% increase over the first quarter, when global investment bottomed due to the global banking crisis. However, Cleantech Group’s quarterly investment report included subsized federal loan guarantees and investments in companies based outside the United States. It is unclear if their report also includes project financing.
The biggest cleantech deal of the quarter, according to Thomson Reuters, was the $50 million carbon-sequestration company
Fund-raising down, too
Deal activity wasn’t the only downer for VCs in Q2. Venture firms raised $1.7 billion for 14 funds during the second quarter, down more than 80% from the same period in 2008, according to preliminary data from Thomson Reuters. The NVCA and Thomson Reuters expect to release official fund-raising data later this month.
The amount raised by U.S. venture firms is the lowest since the third quarter of 2003, records show.
Health care investor
IT and cleantech investor
The only new firm to successfully close a fund was
East coast firms seemed to weather the financial crisis better than their West Coast counterparts. Firms based between Connecticut and Alabama raised $990 million, data show.
Perhaps limited partners have more faith in the region’s ability to produce successful companies than