Post a CommentVC investments hit highest quarterly level in 5 years, report says
By Electronic Business Staff Report -- Electronic Business, 4/24/2007
In the first quarter of 2007, venture capitalists invested $7.1 billion into 778 deals, the highest quarterly dollar amount since the fourth quarter of 2001, according to the MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data by Thomson Financial. Deal volume actually declined in the quarter compared with the fourth quarter of 2006, indicating venture capitalists’ willingness to put more dollars into each round.
Semiconductor investments declined for the third consecutive quarter, with the amount invested falling from $484,420,700 in Q4 2006 to $358,145,500 in the first quarter of 2007. The number of deals also fell from 57 in Q4 2006 to 42 in Q1 2007, according to the MoneyTree Report. However, the number of deals in the semiconductor industry increased in 2005 compared to 2006, from 222 to 229.
The Life Sciences sector had an extremely strong quarter, with Biotechnology ranking as the number one industry for investment, while Medical Devices was at an all-time high. Later Stage investing also jumped in the quarter to the highest dollar level since the fourth quarter of 2000. First time financings remained relatively steady, increasing slightly over last quarter.
“The real story this quarter pivots on Life Sciences with $2.6 billion invested in 198 deals," said Darrell Pinto, director of Global Private Equity Performance, Thomson Financial. "Biotechnology companies received the lion’s share of this with $1.5 billion invested, ranking it as the number one industry for investment this quarter.”
Sector and industry analysisMedical Device investing skyrocketed to an all-time high in the first quarter, with $1.08 billion going into 96 deals, a 60 percent increase in dollars over Q4 2006. Biotechnology was the single largest industry sector with $1.5 billion going into 102 deals, unseating software, which is traditionally the largest sector. Life Sciences (Biotechnology and Medical Devices together) accounted for 36 percent of the quarter’s dollars, an all-time high.
Software investments fell 10 percent from Q1 of 2006 to $1.1 billion into 193 deals in Q1 2007. The decrease can be attributed to lower deal volume. However, Software still had the highest deal level of all industries and was the second largest industry sector for dollar value this quarter.
The Media and Entertainment sector increased 16 percent in dollars to $489 million into 72 deals. Telecommunications increased 27 percent in dollars over Q4 2006 with $588 million going into 63 deals. Within the Telecom sector, Wireless Communications captured $356 million for the quarter.
Internet-specific companies captured $1.3 billion going into 167 deals, a 31 percent increase in investment dollars over Q4 2006 and the highest quarterly level in five years. However, the number of Internet-specific deals decreased since the fourth quarter indicating more dollars being invested in each round. ‘Internet-specific’ is a discrete classification assigned to a company whose business model is fundamentally dependent on the Internet, regardless of the company’s primary industry category such as Software or Telecommunications.
A new Clean Tech category, which crosses traditional MoneyTree sectors and comprises alternative energy, pollution and recycling, power supplies and conservation, will be reported going forward. In the first quarter, venture capitalists invested $264 million into 23 deals in the Clean Tech category, a 41 percent increase in dollar value over the fourth quarter. For the full year 2006, Clean Tech investments were $1.5 billion or an average of $383 million per quarter.
