PwC: VENTURE CAPITAL INVESTMENTS EXPERIENCE DOUBLE-DIGIT INCREASES

By Rob Starr, Content Manager, Big4.com

According to the MoneyTree™ Report from PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA), based on data provided by Thomson Reuters, quarterly venture capital (VC) investment activity climbed 17 percent in terms of dollars and 11 percent in the number of deals compared to the first quarter of 2012 when $6.0 billion was invested in 809 deals.

The Software industry received the highest level of funding for all industries with $2.3 billion invested during the second quarter of 2012, which is the highest investment total for the sector since the second quarter of 2001.  This level of investment represents a 38 percent increase in dollars, compared to $1.7 billion invested in the first quarter.  The Software industry also had the most deals completed in Q2 with 290 rounds, which represents a 16 percent increase from the 251 rounds completed in the first quarter of 2012.

Internet-specific companies received the second highest level of investment in more than a decade with $1.8 billion going into 261 deals, a 22 percent increase in dollars and a 31 percent increase in deals from the first quarter when $1.5 billion went into 199 deals. Investment in Internet companies has surpassed the $1 billion dollar mark each quarter for the past two years, and two of the top 10 deals for the quarter were in the Internet-specific category.  Internet-specific’ is a discrete classification assigned to a company with a business model that is fundamentally dependent on the Internet, regardless of the company’s primary industry category.

Seed stage investments rose 33 percent in dollars and 15 percent in deals with $199 million invested into 63 deals in the second quarter. Early stage investments also rose, climbing 18 percent in dollars and 28 percent in deals with $2.1 billion going into 410 deals, the largest quarterly deal total since the first quarter of 2001.  Seed/Early stage deals accounted for 53 percent of total deal volume in Q2, compared to 46 percent in the first quarter of 2012.  The average Seed deal in the second quarter was $3.2 million, up from $2.7 million in the Q1.  The average Early stage deal was $5.2 million in Q2, down from $5.6 million in the prior quarter.