VC deals reach six-year high

Venture capital disbursements reached a six-year high of $7.1 billion in the first quarter of 2007, according to the new MoneyTree report released last week by PricewaterhouseCoopers, the National Venture Capital Association and Thomson Financial (publisher of PE Week).

The quarter’s top deal was for CardioNet, a San Diego-based maker of wireless mobile cardiac outpatient monitoring devices. It’s known that return backer Sanderling Ventures participated in the company’s recent round, but the company declined to disclose investor information. The company raised $110 million last quarter, which brings the total amount of funding raised by the company to $163 million since 1999. Previous investors in CardioNet include Foundation Medical Partners, Guidant Corp., IngleWood Ventures, J.P. Morgan Partners and Sequoia Capital.

The CardioNet deal led an active quarter for the life sciences sector, as biotech ranked as the number one sector for investments and medical devices deal activity set an all-time high.

VCs invested $1.08 billion in 96 medical device deals in Q1, a 60% increase in dollars over the previous quarter. Meanwhile, 102 biotech companies raised $1.5 billion in the first three months of the year, unseating the software sector, which traditionally garners the most deal flow. In all, life sciences accounted for more than one-third of the quarter’s dollars, an all-time high.

Software deals in Q1 fell 10% compared to the same quarter a year ago as VCs invested $1.1 billion in 193 deals.

Previously, the MoneyTree report had not recognized cleantech deals as a separate category, but that changed in Q1, as VCs invested $264 million dollars in 23 cleantech deals, a 41% increase in dollar value over the previous quarter.

Late vs. Early

Overall in Q1, the number of deals was spread relatively among the stages. Seed and early stage companies accounted for one-third of the deal volume; expansion stage for 35%; and later stage made up about 32% of activity.

But the financing of late stage deals increased in Q1 as VCs invested $3 billion in 245 deals. The funding dollars for seed and early stage companies declined 30% in Q1 to $1.1 billion in 259 companies.

Investments in expansion stage companies experienced a modest dollar increase in Q1, rising nearly 9% to $2.9 billion invested into 274 deals.

Fewer companies received funding for the first time in Q1 compared to the previous quarter. However, the dollar value of the rounds was higher. A total of $1.5 billion was invested in 223 deals in Q1 compared to $1.4 billion invested in 266 deals in the previous quarter. —Dan Primack