Venture financing increased nearly 15% during the third quarter, as VCs report seeing better deals and a resurgence of entrepreneurship.
VCs invested nearly $6.5 billion in more than 800 startups during the third quarter, up from $5.6 billion invested in more than 770 startups during the same period last year, according to PE Week research.
VCs financed their companies earlier in their development this year than last year. Almost 460 early stage companies were financed during the third quarter, up from the 360 that got cash during the same quarter in 2005.
The average deal size also increased, a sign that startups may be getting bid up. The average amount put into each deal increased to more than $8 million, the highest it has been since 2002, and nearly 10% more than the $7.3 million average deal size during the third quarter of 2005.
The Industrial and Energy sector jumped more than 300% in investments as VCs plowed dollars into cleantech deals. VCs pumped more than $700 million in 50 companies in the sector, up from almost $175 million in 35 companies during the third quarter of 2005.
The Media and Entertainment segment also saw big gains. Investors put nearly $415 million in 74 startups in the space during the third quarter, an 88% gain from the $220 million invested in 43 startups during the same period last year.
However, software was still the most popular sector for VCs to put money to work with 178 deals done in the quarter, but dollars invested slid down 4% to $1.09 billion from $1.15 billion in Q3, 2005.