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Venture capital investments up 19% in Q4

Fri, 01/20/2012 - 2:05pm
The Associated Press

Funding for start-ups rose 19 percent in the fourth quarter as venture capitalists fueled money into more companies in the Internet, clean technology and other sectors.

According to a study released Friday, start-up investments grew to $6.57 billion in the October-December quarter from $5.52 billion in the same period in 2010. The volume of deals, though, did not keep up with the amount of money invested. There were 844 deals completed in the fourth quarter, down from 861 a year earlier.

Called the MoneyTree report, the study was conducted by PriceWaterHouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

For all of 2011, venture investments jumped 22 percent, to $28.43 billion in 3,673 deals. That's up from $23.26 billion in 2010, when the money went to 3,526 deals.

Venture capitalists piped $133.9 million into 80 seed-stage companies in the fourth quarter. That's down from $233.2 million going to 90 such start-ups in the fourth quarter of 2010. The decline suggests some caution on the part of venture capitalists looking at the newest, often most risky start-up investments.

A total of 364 early-stage companies snapped up $2.27 billion in venture funding during the quarter. That compares with $1.48 billion going to 318 early-stage start-ups in the last three months of 2010. The report said 222 companies in the expansion stage received $2.36 billion in funding, compared with 270 companies snagging about the same amount a year earlier. In the later stage, 178 start-ups received $1.8 billion in the fourth quarter, while $1.4 billion went to 183 companies a year earlier.

By industry, software companies received the most funding, with $1.76 billion snagged in the fourth quarter, followed by biotechnology with $1.27 billion.

San Francisco-based Internet storage locker Dropbox got the single-largest investment during the quarter: $250 million. In second place was Better Place, which is based in Palo Alto and builds infrastructure and systems for electric vehicles, with $200 million.

John S. Taylor, head of research at the National Venture Capital Association, said the figures show "cautious optimism."

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